Monday, November 19, 2012

Have you optimized your 2012 tax ? Last call !

Do you know that you can actually save up to RM 925 by paying attention to your tax even if you are only earning Rm 3,000 a month ?  The example is illustrated here !

This is a reminder last CALL for you to optimize your 2012 tax.  IRB may actually pay you a bonus this year !

Wednesday, November 7, 2012

Malaysia Stock Market 20121107

Buying opportunities again ... are you dare to go for some year end bonus this year ?

TM : no major news, could have bought in today.  Should be a good keeper.


AIRASIA : EPF leaving, International investors support, internal Directors buy back.  If you like Airasia business model etc.  Opportunity to buy now.  No foreseeable big profit gain by year end thao.


AXIATA : No Major News, EPF & Amanah Raya holding up.


DIGI : face problems in service area, technical issues, licenses etc.  EPF disposing.  Watch closely for Management strategy turn over.  Now this company is 'finally' going south, not just stock wise, mainly business wise.


PBBANK : NO Major news, EPF continuously holding up.  But technically just started a down trend.  Don't chase down trend, wait a bit on this one.


What is your opinions ?  All comments welcome ...

Saturday, October 6, 2012

Reversal Trend Stocks

In stock investment, you should learn how to see the mega trend.  When it is generally a bull trend, you simply buy some blue chips and it shall earn you some good money.  When bear comes, you took your profit.  As long as you don't stay too close to the market, this can rather easily be achieved.  Just walk around a wet market and ask 10 stalls how the market is.  You will be surprised how closely their non-professional opinions are related to the real market performance.

Then you must realize NOT ALL stocks are the same.  Even during an obvious bull run, there are some stocks going down.  Like wise during bear runs.  Some stocks will still go up.  Finding out these 'Reversal Stocks' is important for a full time traders.

The reason goes like this:  there is a fix amount of money floating in the market.  The mega fund managers simply CAN NOT withdraw TOTALLY from the market even if it is GUARANTEED a bear market.  They are required by law to keep investing ie. 70% of their fund.  So during bear market, they will focus on a few stocks to minimize loses.  As a result, during bear market, a few stocks will always be on a up trend.  And not surprisingly, those are the stocks didn't join the previous bull run.

As long as you have done your fundamental analysis, knowing mega trend stocks and reversal stocks allows you to invest both during good and bad time.

Saturday, September 8, 2012

Cheated or Own Ignorance ?

a Guaranteed 20% return investment was introduced earlier and it is indeed legitimate.  But do you know it is like an offer " Give me $10 now, I will give you back $9 ".  And of course it is Guaranteed !



Gold Price is about $17,000 at the time that offer was made.  You could easily buy a 100g gold bullion at $18,000 at market rate.

A recap of the offer as below

SummaryMaximum Capital : $ 23,500
Total Return : $4,590
Rough Return : ~20%
As you can see, you are actually paying an extra of $5,500 at the beginning without realizing it.  ( If you know the gold price, you would probably NOT buying it, would you ? )

23,500 - 18,000 = 5,500

Then through out the period, they will pay you back $4,590 and yet they can keep an extra profit of about $1,000

5,500 - 4,590 = 910

Of course it is Guaranteed !  Because you already pay them the money they will pay you back.  All they need to do is to keep the extra money in a FD and they can easily honour the 'contract' they promise to pay you back.


Is that a scam ?  Well, not really.  Because they didn't really cheat or present any incorrect facts.  They will even show you the gold price at that point of time.  Gold selling price is always higher than the gold index price because traders need to pay other fees and make a profit.  

The problem is you don't know how much other gold traders are selling gold bullions at.

So the only 'trick' for a person who 'invest' into such a scheme is his own 'ignorance'.  There isn't really a crime nor fault of the business here.  It always PAY to be IGNORANT.  And this is the best real life lesson you can get.  After all, you only pay $910 for such a lesson.

Then again, almost ALL of those who invested in such a scheme STILL DO NOT UNDERSTAND what they have got into.  They will simply just get out of this scheme one day and get into another similar ones.


Wednesday, August 29, 2012

20% Guaranteed Return through GOLD ?

Have you ever heard of an investment with Guaranteed Return 20% ?  Well, this particular one is from The Gold Guaranteed . . . what do you think the catch is ?

  1. You Buy Bullion Gold from TGG ( The Gold Guaranteed )
  2. You keep the gold
  3. You sign a 3-months-contract with TGG
  4. TGG pays you 1.7% every month
  5. At the end of 3 months, you can choose to 
    1. renew the contract for another 3 months or
    2. sell the gold back to TGG how much you have paid for ( ie. your Capital ) 
  • To renew the contract, you have to pay the additional cost if the gold price has gone up
  • Like wise if the gold price has gone down, you get paid extra and also gets to renew the contract

For example, at end of August . . .
  1. You pay $22,500 for a 100g bullion and signed the 2 pages contract
  2. You get paid $382.50 monthly for the next 3 months ( 22,500 x 1.7% )
  3. 3 months later, 100g gold price goes up to $23,500.
  4. You paid an extra $1,000 and renew the contract
  5. You get paid $399.50 monthly for the next 3 months ( 23,500 x 1.7% )
  6. another 3 months later, 100g gold price goes down to $21,500.
  7. You get paid $2,000 and renew the contract
  8. You get paid $365.50 monthly for the next 3 months ( 21,500 x 1.7% )
  9. another 3 months later, 100g gold price goes back to $22,500.
  10. You paid $1,000 and renew the contract
  11. You get paid $382.50 monthly for the next 3 months ( 22,500 x 1.7% )
  12. when the contract ends, you sell it to TGG and get back $22,500

Month paid get back
1 $22,500 $383
2 $383
3 $383
4 $1,000 $400
5 $400
6 $400
7 -$2,000 $366
8 $366
9 $366
10 $1,000 $383
11 $383
12 $383
$4,590


Summary
Maximum Capital : $ 23,500
Total Return : $4,590
Rough Return : ~20%

All this happens while you are keeping your own bullion gold with you until you sell it back to TGG.

How does this sound to you ?  What could be the catch if any at all ?

What other strategies you may apply assuming this is a genuine deal ?

Tuesday, August 7, 2012

Malaysia Lowest Stock Brokerage Fee

MPlus Online and ECMmoney offers the lowest brokerage fee @ 0.08% for cash upfront account.  MPlus offers even lower rate @ 0.05% if you have more than 30k balance.

Follows by Hong Leong, Jupiter Online, OSK 88  who offers 0.1%


I have been using Jupiter but I am paying 0.45%.  I forgot why I pay so much, perhaps its because I am an Elite member who obtain extra trading info !?  My effective fee cost is actually 0.6% and below.

I tried to switch to CIMB but not successful due to their systems are not easy to use.  I stay with Jupiter mainly because I can trade from my android phone.

Have you used any of above brokers ?  Are they good ?

Sunday, August 5, 2012

How Corrupted are we ?

Below table shows how corrupted a country is perceived to be.   The smaller the number is the more corrupted the country is.  For example, North Korea, Russia, Nigeria, Pakistan and Philippines are perceived to be corrupted while New Zealand, Singapore, Australia, Hong Kong, Japan are perceived to be "clean".

Malaysia is somewhere in the middle comparable to Soudi Arabia, South Africa and Italy.

source : wiki

Thursday, August 2, 2012

earn Money with Money


Read this from Alan Tan's facebook, seems very meaningful to me.  So sharing here with you all ...

By Alan Tan

One day, an old man and his assistant arrived at a farming village. The old man gathered all the villagers and told them that he is in the business of buying and selling monkeys and that the reason why he has come to their village is becoz there is a forest next to that village which is infested with lots of monkeys. He told the villagers he would pay $10 for every monkey they bring him.



So some of the villagers started to stop work on their farms to go into the forest to catch monkeys. They brought their monkeys to the old man and true enough, he paid them $10 for every monkey. Words spread and not long after, more and more of the villagers stopped working on their farms to go into the forest to catch monkeys. And they were all paid $10 for every monkey they delivered to the old man.

Becoz more villagers were now monkey hunters, it became more and more difficult to catch monkeys as their numbers started to dwindle. The supply of monkeys started to come down. So the old man gathered all the villagers and told them he would pay $20 for every monkey they bring him. Wow! That sounds great and the villagers started to drum up the beat to look deeper into the forest and higher into the trees to look for more monkeys. And they were paid $20 for every monkey they caught and everyone was happy.

As more and more villagers turned monkey hunters, the monkey population in that forest started to dwindle very significantly and it became increasingly difficult to catch even one monkey a day. As such, the villagers started to return to their farms to work.

Once again, the old man gathered all the villagers and told them that as he is running out of time and he needed more monkeys, he would up the stakes and pay $50 for every monkey delivered to him. He also told the villagers that as he has to leave the village for a few days to attend to some business in town, they can deliver the monkeys to his assistant and his assistant has been instructed to pay $50 for every monkey caught.

The villagers got all excited and went deep into the forest to look for monkeys but by this time, there were no monkeys to be found. The villagers approached the assistant and told him the $50 offer is wonderful but the monkeys were simply not there.

That assistant then said to the villagers......"I know there are very few monkeys left in the forest. But here in my cages, I have thousands of monkeys. Tell you what...why not you buy these monkeys from me at $35 each. Then when the old man comes back, you can sell your monkeys to him for $50 and make $15 each."

Wow! That sounds like a great idea...the villagers thought. So they bought as many monkeys as they could from the assistant at $35 each.

After that day, the villagers never saw the old man or his assistant again

=====

What do you take away from this story ?

Monday, July 30, 2012

Tenaga Power Factor Surcharge

Tenaga Malaysia WILL charge you more if you have in-efficient electrical appliances, old wiring etc. at your home.

Wednesday, July 25, 2012

KLSE 2012 07 26

Try give these stocks an eye ...

MRCB : worth buying below 1.80, potential peak 1.90, can observe for another 3 trading days before making decision.

UEMLAND : worth buying below 2.00, potential peak 2.08, observe another 5 trading days before decide.

YTL :  -- do your own research --

MAS :  -- do your own research --

DIALOG, MAXIS : some recommended this but not me.


Saturday, June 2, 2012

FREE lunches - the real one !

Dear Michael,

While many people still think there is no such thing as FREE lunch in this world.  I have been having FREE lunches for more than 5 years now.  Not only that, I actually get paid when I eat.  Sometimes they even force me to bring a friend with me for FREE too !


Unlike some who thought I may have been keeping it a secret, I didn't !  I actually told my friends about it.  And remember ?  Sometimes I have to bring my friends to have the FREE lunch.  So I had to explain to them what it is all about.

Most would guess that once people know it, people would go grab all these FREE lunches.  Normal people like you and I would have no chance of getting them at all !  But after years of having FREE lunches, I can tell you in confidence that on the contrary, I actually received calls begging me to go for some FREE lunches and I actually have to turn some of them down.

There is NO special contacts needed, I am not any Datuk's son, no special pre-qualify skills needed.  All I need a computer and internet connection.  They teach me all the things I needed and I am good to go.

Ok, no more suspense.  All you need to know can be found in gapbuster.com

The reason I am sharing with you is that I want to bet with you.  Even after your readers learn this secret of FREE lunches.  Most of them, may be ALL of them, will still NOT join me here.  You see, human are always limited by their own thoughts without realizing it.  For some who realize it, they refuse to make a change on it.  Well, I shall explain more later if needed but let's see ....

Love your Finance Tips,
Mathew

Wednesday, May 23, 2012

The Only Man in the World Who Knows What Really Went Wrong at JPMorgan Chase

If you were following Nasser's blog and have missed his commentaries, I just posted a conversation with him on my blog. Thought you might want to know.

Wednesday, May 9, 2012

Who make money from stock market ?

why some idiot can earn money from stock market but some smartest analysts don't ?

Friday, May 4, 2012

list of Malaysia past expenditures ?

I saw below list from facebook, do you know what they are !?!?


1. PKFZ RM12 billion

2. Submarine Commission RM500 million

3. Sime Darby RM964 million

4. Paya Indah Westland RM88 million

5. Pos Malaysia (Transmile) RM230 million lost

6. Eurocopter deal RM1 billion wasted?

7. Terengganu Stadium collapse RM292 million

8. MRR2 repair cost RM70 million

9. Maybank overpaid BII RM4 billion

10. Tourism - NYY kickback RM10 million

11. 3 paintings bought by MAS RM1.5 million

12. Overpayment by Sport Ministry RM8.4 million

13. London’s white elephant sports complex RM70 million

14. MATRADE repairs RM120 million

15. Cost of new plane used by PM RM200 million

16. InventQ irrecoverable debt RM228 million

17. Compensation for killing crooked bridge RM257 million

18. Loss in selling Augusta RM 510 million

19. Worth of APs given out in a year RM1.8 billion

20. Submarines (future Muzium Negara artifacts) RM4.1 billion

21. PSC Naval dockyard RM6.75 billion

22. The Bank Bumiputra twin scandals in the early 1980s saw US$1
billion losses (RM3.2 billion in 2008)

23. The Maminco attempt to corner the World Tin Market in the
1980s is believed to have cost some US$500 million (RM1.6
billion)

24. Betting in foreign exchange futures cost Bank Negara Malaysia
RM30 billion in the 1990s

25. Perwaja Steel’s US$800 million (RM2.56 billion) losses

26. Use of RM10 billion public funds in the Valuecap Sdn Bhd operation to shore up the stock market

27. Banking scandal of RM700 million losses in Bank Islam

28. The sale of M.V. Agusta by Proton for one Euro making a loss of €75.99 million (RM348 million) Same as No.20?

29. Wang Ehsan from oil royalty on Terengganu RM7.4 billion from 2004 – 2007

30. For the past 10 years since Philharmonic Orchestra was established, this orchestra has swallowed a total of RM500 million. Hiring a Kwai-Lo CEO with a salary of more than RM1 million per annum!

31. In Advisors Fees, Mahathir was paid RM180,000, Shahrizat Abdul RM404,726 and Abdul Hamid Othman (religious) RM549,675 per annum

32. The government has spent a total of RM3.2 billion in teaching Maths and Science in English over the past five years. Of the amount, the government paid a whopping RM2.21 billion for the purchase of information and computer technology (ICT) equipment which it is unable to give a breakdown. Government paid more than RM6,000 per notebook vs per market price of less than RM3,000 through some new consortiums that was setup just to transact the notebook deal. There was no Maths & Science Content for the teachers and the notebooks are all with the teachers' children now.

33. The commission paid for purchase of jets and submarines to two private companies - Perimeker Sdn Bhd and IMT Defence Sdn Bhd amounted to RM910 million. Expanding on No. 2?

37. RM300 million to compensate Gerbang Perdana for the RM1.1 billion "Crooked Scenic Half-Bridge"

38. RM1.3 billion has been wasted building the white elephant Customs, Immigration and Quarantine (CIQ) facilities on cancellation of the Malaysia-Singapore Scenic Bridge

39. RM100 million on renovation of Parliament building which leaks

40. National Astronaut (actually tourist) Programme – RM40 million

41. National Service Training Programme – yearly an estimate of RM 500 million ( MOST National Service Camp LAND OWNERS are tied to Najib or old 'friends' of Najib )

42. Eye of Malaysia - RM30 million and another RM5.7 million of free tickets

43. RM2.4 million on indelible ink

44. Samy Vellu announced in September 2006 that the government paid compensation amounting to RM38.5 billion to 20 highway companies. RM380 million windfalls for 9 toll concessionaires earned solely from the toll hike in 2008 alone

45. RM32 million timber export kickbacks involving companies connected to Sarawak Chief Minister and his family.

46. Two bailouts of Malaysia Airline System RM7.9 billion. At a time when MAS is incurring losses every year, RM1.55 million used to buy three paintings to decorate its Chairman’s (Munir) office. Expanding on No.11

47. Putra transport system bailout which cost RM4.486 billion.

48. STAR-LRT bailout costing RM3.256 billion.

49. National Sewerage System bailout costing RM192.54 million.

50. Seremban-Port Dickson Highway bailout costing RM142 million

51. Kuching Prison bailout costing RM135 million

52. Kajian Makanan dan Gunaan Orang Islam bailout costing RM8.3 million

53. Le Tour de Langkawi bailout costing RM3.5 Million

54. Wholesale distribution of tens of millions of shares in Bursa Malaysia under the guise of NEP to cronies, children and relatives of BN leaders and ministers worth billions of ringgit.

55. Alienation of tens of thousands of hectares of commercial lands and forestry concessions to children and relatives of BN leaders and Ministers worth tens of billions of ringgits.

56. Since 1997, Petronas has handed out a staggering RM30 billion in natural gas subsidies to IPPs who were reaping huge profits. In addition, there were much wastages and forward trading of Petronas oil in the 1990s based on the low price of oil then. Since the accounts of Petronas are for the eyes of the Prime Minister only, we have absolutely no idea of the amount.

57. RM5,700 for a car jack worth only RM50

58. Government-owned vehicle consumed a tank of petrol worth RM113 within a few minutes

59. A pole platform that cost RM990 was bought for RM30,000

60. A thumb drive that cost RM90 was bought for RM480

61. A cabinet that cost RM1,500 was bought for RM13,500
62. A flashlight that cost RM35 was bought for RM143

63. Expenses for 1Malaysia campaign paid to APCO?

64. RM17 billion subsidy to IPP

65. US$24 million Diamond Ring for Ro$mah - Cancellation of Order - how much compensation?

66. CowGate ... RM250 million

67. Monsoon Cup . . . RM800 million per year

68. Illicit Fund Transfers out of Malaysia (2000 - 2009) : RM 1,077,000,000,000!

69. Tajudin-Danaharta settlement to cover up for Dr M and Daim

70. Billions of ringgit toll concessions that disadvantage the government and taxpayers

71. MUSA-AMAN's Timber-Concessions kick-backs worth $90Million US Dollars into his personal account causing thousands of acres of precious Rainforest in Sabah ( homes of endangered wild life such as Orangutans, Borneo Pygmy-Elephants & the Sumatran Rhino ) to be cut-down....

Monday, April 30, 2012

Malaysia Best Rates 2012 April 29 Update

TOP Fix Deposit up to 12 months is Affin = 3.6%.  Most others are offering 3.1% to 3.2% so you should change your FD bank if they are still giving you 3% or below ...

Monthly renewal FD is 3.05% from Affin, Bangkok Bank, Bank of Nova Scotia.

Alliance offers the lowest car loan rate at 2.65% but it may goes up to 4.8% as well so it really depends on your negotiation skill.

BLR hasn't changed much since Nov 2011, JP Morgan 6.2%, Royal Bank of Scotland and Bank of Tokyo offers 6.25%.  Most of the others are 6.5% to 6.6%.

CIMB's AirAsia saver account offers 1.6% saving account interest while Maybank's Flexi Safer Plan offers 1.5%.  Most of the others are offering 0.X%


HAPPY LABOUR DAY !!


FREE INFO on Malaysia Best Rates


Friday, April 6, 2012

A Note to Friends and Readers

That the posts on this blog have become spotty and less frequent goes without saying. That is because it has become impossible for Nasser to write, if you take “impossible” in its practical and not literal sense.

The fourth and final volume of Speculative Capital is just one impediment. Nasser is determined to complete the manuscript this year. But the manuscript keeps changing. Nasser says that is indicative of a dialectical process. That may be. But rewrites take time, leaving little room for much else.

I realized it was time to take the subject head on after three more translations of Hegel’s Logic arrived at our doorsteps. One was the 700+ page The Science of Logic from Cambridge University, translated by Prof. George di Giovanni of McGill. His opening sentence in the translator’s 70-page introduction says: “Writing an introduction to a translation of Hegel’s Logic is an even more formidable task than the translation itself”. You get the idea.

The other was Henry Stuart Marcan’s 1912 book with the friendly title Doctrine of Formal Logic, Being a Translation of the First Section of the Subjunctive Logic. More than a third of the book’s 300 pages is the translator’s introduction.

The third book was Hegel: Three Studies, translated by Shierry Nicholsen from Theodor Adorno’s 1963 book in German. Adorno writes:
The way in which Hegel’s great systematic works, especially the Science of Logic, resist understanding are qualitatively different from those of other infamous texts. With Hegel the task is not to simply ascertain, through intellectual effort and careful examination of the wording, a meaning of whose existence one has no doubt. Rather, at many points the meaning itself is uncertain, and no hermeneutic art has yet established it indisputably.
No one who reads these books on the sideline and during breaks from his other responsibilities will have much free time. Adab– that Farsi word for politeness, concern and respect – demanded that the blog’s friends and readers were informed.

Why, you may ask, this bookish interest in Hegel from a student of economics/finance in the midst of an economic/financial crisis?

Hegel’s dialectics is the account of the movement of thought in search of Truth. Do not be alarmed by that word. It has a technical meaning that will become clear in Vol. 4. The point is that the compulsion of thought constantly drives the mind to higher phases in search of more satisfying answers. In practical terms, that means going to the root of the problems. And that is the aim of Vol. 4: to go to the root of the problems in economics and finance, beyond incidental tales of events and characters. Hence, the need for the author to master Hegel.

But I must warn you against drawing conclusions about the readability of Vol. 4 by “associating” it with Hegel’s “infamous” texts.

Hegel wrote that “self-consciousness achieves its satisfaction only in another self-consciousness”. The “other” of Hegel’s western philosophy is Jalaludin Rumi’s Eastern philosophy. Hegel’s Western scholars are deprived of the “other”, hence their confusion and difficulties in reading him. Nasser knows them both and thus, indisputably. That translates to a penetration of thought and clarity of writing that is unparalleled.

As proof of that assertion and as a prelude to the book’s release, I have decided to adopt ideas from the manuscript and present them in a new blog called Dialectics of Social Change. I do not have Nasser’s encyclopedic knowledge in economics, finance and politics. But I know his Theory of Speculative Capital and his writing style; I have edited his books. So my writing should offer some continuity of style and content – and keep the bench warm until the man himself returns.

The first entry is ‘No Country for Old Man’. Channel hopping one evening while waiting for Nasser to go to a dinner party, I paused on a movie that was in progress. Nasser came in and recognized the movie. A long conversation that followed on the way and continued during the dinner is the basis for the post.

See what I mean by the inability of the mind to rest on the untruth – its compulsion to seek progressively higher stages of truth.

Sarina Saber

Sunday, March 4, 2012

Use Home Loan to Buy Car ?

Matthew is refinancing his property @ 4.2%.  He will have an extra $100k.  So he is planning to buy a $100k car too.  The car loan is offering him 2.88%.

Should Matthew use his home loan to buy this car or should Matthew take the car loan ?

The answer, contradict to common comments, is actually home loan but . . .
Assumption : 7 years loan


Reason 1

If you take home loan approach, your monthly repayment is $1,376.11
If you take car loan approach, your monthly repayment is $1,430.48

You will have a better CASH FLOW 
with the home loan approach.
You pay less.

Reason 2

If you take home loan approach, you have paid a total of $115,593 after 7 years

If you take car loan approach, you have paid a total of $120,160 after 7 years

You save a total of $4,567 with the home loan approach.

So either way you analysis the comparison, it is BETTER to use the home loan to buy the car instead of getting the car loan.

WHY ?  How can this be possible ?  How can 2.88% worst than 4.2% !?!?  The answer is all in an old post.  In short, car loan rate is 1.9x equivalent to home loan rate.  So in this case, 2.88 x 1.9 = 5.4 which is higher than 4.2% ( home loan ), hence this particular car loan is not better than this particular home loan.


However . . .

1.  The home loan is NOT a 7 year loan.  Above analysis is only valid if Matthew top up $1,376 monthly repayment to his 'flexi' home loan.  Else continue paying original repayment amount would drag this extra $100k loan to 30 years, that will make home loan a losing deal.

2.  his home loan offer is actually BLR - 2.4%.  So if the BLR raise above 8% one day before the 7 years period, this may become a losing deal again in future.

The world is fair and balance, in this particular case, it is obvious scientifically better to use home loan to buy the car instead of getting another new car loan ie. a saving of 4.5k plus.  However, it does come with certain risk ie. future BLR rate and a requirement - discipline top up repayment.

Sunday, February 19, 2012

21st century personal finance trap

Do you know Gabriel ?  'G'abriel actually represent  'god' within MalPF world.

  • He worked for less than 10 years
  • Then he runs some businesses for about 13 years, some of them making loses
  • Yet he retires at 42 and live happily ever after (details)
The trick is . . .
 there is no trick.  You have to live your life as the life itself.  Don't ever forget what you really want, don't ever get confused by the money figures.  There are many ways to achieve what you want or need other than using money.  ( what do you mean ? )
There is an increasing trend of young people retiring early.  While it may seems like a great personal finance trend.  But that will soon become the 'new' personal finance trap of 21st century !

A 30-year-old man who only uses $500 expense but with passive income of $999 may thought he is financially free.  But he will find himself caught at middle age crisis when he realizes his $999 is no longer enough and yet he can NO LONGER find a job after his 10 years rest.

A blogger who earns enough for his living may thought he is financially free.  But in less than 3 years of resting he has to make more multiple streams of income to stay 'retire'.  Just as when he thought he has written enough books, he found himself writing another one.  At the end, his so called passive income turns out to be really an active income.  


Gabriel part 3 story tells it all.  Not many people caught the warning the last time, so herein I re-write this again . . . beware, if you think you are already financially free, think again, if you haven't lay down your figures on a paper, you may have just been living in your own dream that you built for yourself - and that is no where near real life.

Sunday, January 22, 2012

The Saga of Viktor Orban and Hungarian Democracy

I rarely write “follows ups”. Events I discuss on this blog are driven by the irresistible hand of speculative capital, so their outcomes tend to be preordained. Still, on a snowy weekend in New York I thought to take a break from work and give you an update on Viktor Orban’s saga. The information from the Financial Times is in my fingertips and there might be an educational angle to the story. You know Viktor Orban of Hungary, don’t you, from the previous posts here and here.

Pressure mounts on Hungary (Wed, Jan 18)
A simmering battle between Brussels and Budapest intensified yesterday when the European Union’s executive branch ruled that three new Hungarian laws violate EU treaties and began legal proceedings to overturn the measures, one of which officials believe threatens the independence of Hungary’s central bank.

The heightened tensions came as the government of prime minister Viktor Orban continues to seek aid from the EU and the International Monetary Fund. Brussels has said it is unwilling to support such aid until Mr Orban revises the central bank law, which gives the prime minister increased power to appoint senior management at the bank.
Who, then, should appoint the senior management at the central bank of a country?

Orban fights shy of battle with EU critics (Thu, Jan 19)
In a hastily arranged visit to Strasbourg, Viktor Orban sought to reassure critics that the sweeping reforms by his government since its landslide election victory in 2010 were in line with European principles... The EU’s executive arm on Tuesday announced it was taking legal actions against Hungary to reverse measures it believed could compromise the independence of the central bank and judiciary among others.
Landslide victory. Reversing local law. Central bank independence. European values.

European values!

Hungary’s leader ready to back down in EU dispute (Fri, Jan 20)
Viktor Orban, Hungary’s prime minister, appeared to back down on a key issue in the country’s dispute with the European Union, increasing market optimism that talks could soon start on a financial support package. Mr Orban told a radio station he was prepared to drop a planned merger of the country’s central bank and financial markets regulator, which had raised concerns over the independence of the central bank... “It is important to accept that there appears to have been a complete turnaround, even a U-turn, in terms of the attitude of the Hungarian administration – and right to the top,” said Tim Ash, head of emerging markets research at RBS.
Game, set, match, then, you say?

Not at all.

Game, perhaps. But set and match are yet to be played. Therein lies the educational aspect of the story that I mentioned.

Yesterday, after the prime minister’s U-turn, Paul Krugman of the New York Times had a guest post titled Hungary, Misunderstood? If you click on it here, you will see it is quite a post, dense with data, graphs, text and obscure references that, unless you are a student of Hungarian history, you would neither know or care about.

What is more, if you search Krugman’s blog for “Hungary”, you will find 10 posts. Here is the page in question. One relatively sympathetic article is from August 10, 2011. The rest, progressively critical, including Hungary’s “hair raising” march towards dictatorship, begin in December 2011.

Why is this man who cannot properly pronounce the name of the capital city of Hungary so suddenly interested in that relatively small country? What gives?

A partial answer is that Krugman is the attack dog of neo-liberalism. He hears the whistle and off he goes. The attacks he leveled on the opponents of NAFTA who said that the treaty would result in destruction of jobs in the US would make Rush Limbaugh blush.

But it is not a matter of one attack dog only. Today, two days after the matter seemed all but settled, came the editorial in the New York Times. Titled Hungary’s Lurch Backward it went for the jugular from the opening sentence: “The soothing words of Hungary’s prime minister, Viktor Orban, do little to counter his government’s assault on the independence of Hungary’s press, judiciary and central bank”.

It ended by saying:
Unimpressed by Mr. Orban’s facile promises, the majority parties in the European Parliament now want governmental leaders to consider invoking a clause of the E.U. treaty that would strip Hungary of some voting rights if Mr. Orban continued to flout European law. Europe’s powers to nudge Hungary back from authoritarianism are limited. But to its credit, it has begun wielding them.
If you are not Hungarian and ordinarily do not follow the affairs of the country, I say keep Viktor Orban’s name in the back of your mind. My guess is that you will see it again – and never in a positive light. In fact, that is how you will only hear of his name – until you hear of it no more.

And as a tribute to Hungarians everywhere, get a copy of Marai’s Casanova in Bolzano. Whether you read it on a gloomy winter day in New York or under sunshine in Sao Paulo, you will see it is the most adult, and therefore the most touching, love story ever written!

Tuesday, January 17, 2012

On the Theory of Knowledge

In yesterday’s post on the EU, I mentioned en passant the Hungarian prime minister Viktor Orban and his demonization in the west after he got between capital and its quest for high rate of returns.

Today, the New York Times had a front page article in the business section on Hungary. Hungary, Once a Star, Loses Its Shine, was the heading. If you can, read the whole piece here. If you read yesterday’s post, you will smile in many places and can even anticipate what is coming next. I was not kidding about the tiresome predictability of the news. Look at this paragraph:
To some critics, the biggest problem with the Hungarian economy is Mr. Orban himself …Backed by a two-thirds majority in Parliament, Mr. Orban has passed a flurry of laws that have concentrated power in his hands, weakened competing institutions like the central bank and alienated international lenders as well as an increasing number of Hungarians.
No doubt one of those alienated Hungarians is George Soros.

Note also the reference to “competing institutions”. The Times considers Hungary’s central bank as a competing institution with the government. I could not have said it better myself.

I have a soft spot for Hungarians because of Sandor Marai. His Casanova in Bolzano is the most adult and thus, the most touching, love story I have read. But this is not about Hungary. Rather, I want to make a point about what you know and how you know.

From the short Times paragraph above, we see that Orban has two-thirds majority in the parliament. That is more than you could say for Cameron, Merkel or Sarkozy. Yet, try as you might, you will not find a single article in English anywhere – newspapers or otherwise – explaining Orban’s point of view and his rationale for submitting those laws to the parliament. Nada. Zilch.

There is no centralized command and control center for these media outlets. How could it be that they all say the same thing as if on cue?

Which brings me to Michael Burleigh.

I don’t know who Michael Burleigh is. He must be a piece of shit, judging from where he writes and what he writes. I stumbled upon his writing following news links in relation with the assassination of the Iranian nuclear scientist. Here is what he wrote:
They [Iranian nuclear scientists] work for a regime that has explicitly threatened Israel (and by implication many ambient Palestinians) with such a weapon. I shall not shed any tears whenever one of these scientists encounters the unforgiving men on motorbikes, men who live in the real world rather than a laboratory or philosophy seminar
I am not concerned with the lie about Iran having nuclear weapons or threatening others with them. Nor do I care about his use of the word "unforgiving". Unless he knows the assassins, he could not possibly know their motive.

What fired me up, though, was his put-down of men studying philosophy. I am one such man, constantly brushing up on my Rumi, Kant and Hegel to use in the upcoming Vol. 4.

The above mentioned shit thinks philosophy has no relation to real life. He is right so far as what he has in mind is philosophy as taught at Harvard and Yale. But real philosophy is real, sufficiently real, in fact, as to be unsettling. You will see.

Sunday, January 15, 2012

Epilogue: The Origin of the [Crisis in the] European Union

The idea of a man-made machine escaping his control and becoming a menace is familiar to modern men. It is the fantastic, subjective reflection in his mind of his real-life condition of being subjugated to the unrelenting rhythm of the factory system. The system was firmly in place in Western Europe by the beginning of the 19th century. Shelly published her Frankenstein in 1818.

The rise of large-scale industrialization in the next century and the introduction of the assembly line further intensified the subjugation. Assembly lines break down the manufacturing process into simple, repetitive tasks. Simplicity, as they say, is the killer. It allows for the replacement of skilled labor by the unskilled cheaper labor. In this way, it makes the individual differences irrelevant, reducing men to interchangeable cogs in a mechanical process that dictates the speed and intensity of their work and over which they have no control.

An out-of-control monster lends itself nicely to story-telling and visual presentation, which is why the new medium of film in the 20th century repeatedly visited the subject. Chaplin’s The Modern Times, Kubrik’s 2001 with its homicidal computer, The Blade Runner and The Terminator are perhaps among the better known examples of the genre. Movies exploited the menace of machinery at the same time that they kept it alive in the popular psyche.

But the mechanical aspect was always unconvincing. A physical monster is limited in size, proportion and reach. So its capacity to harm is limited. More to the point, a machine, no matter how intelligent, powerful or sinister, could always be brought under control – or just destroyed – possibilities that all film makers, as well as Shelly herself, had to acknowledge.

If we wanted to make a real menace, we would have to do away with such limitations.

Think of a menace that you could not see!

The invisibility I am talking about here is not a matter of stealthiness. Stealthiness is a property of physical objects and has the same limitations: it could be defeated and destroyed. Think, rather, of a menace that you cannot see because it is per se invisible. Such a menace could not be something physical. It would have to be something conceptual.

Conceptual is different from subjective. A subjective thing is purely mental, with no independent existence outside the mind of the person who is thinking it. Fear is subjective. It exists in a person’s mind only. Even when it arises from something real in the outside world, it can be driven out of thought. That is what Roosevelt was advising with his “the only thing we have to fear is fear itself” pronouncement. One could stop fearing.

Force, by contrast, is conceptual and real. It exists in the material world independent of our imagination. Whether we think of gravity or not, whether we are conscious of it or not, it exists and will continue to exist. It cannot be wished away or dispelled by determination and mental prowess.

How do we know that the invisible gravity exists? We know that from its manifestations: because objects fall; because there are two high tides a day; because the moon stays in its orbit around the earth; because the earth stays in its orbit around the sun.

Each manifestation, however, is individual and thus, limited. It cannot make known the full extent of the force because the force is more than – broader than – any of its individual manifestations. No amount of mere observation would lead one to suspect that there was a commonality between an apple falling from a tree, the daily high tides and the structure of the solar system. It is impossible to understand these phenomena and thus, impossible to establish a link between them, unless we understand the force of gravity in its fullness. To understand gravity in its fullness is to understand it as concept.

As a concept, gravity has no physical or temporal boundaries. Hence, the universality of its effects. Because it is nowhere and nowhen, it is invisible.

Capital, too, is a conceptual force, only that it is social. Being social, it is historical: There was a time in the course of the development of societies when capital did not exist. This historical-vs-natural distinction between capital and gravity is no idle erudition. I bring it up because it goes to the heart of understanding capital and our subject of the EU crisis. For, unlike gravity which is a blind force, capital is a live and a conscious force.

In his Doctrine of Notion, Hegel deduces the category of life as “unity in plurality”. Life is a “conception of unity whose whole nature consists solely in its differentiation into the plurality which is subsumed under it, and a plurality whose whole nature consists solely in its forming that unity.”

The “life” in Hegel is not the organic life as we know and understand it. Life’s multitude of dimensions goes beyond the unity-in-plurality attribute. Hegel merely names an abstract category he is deriving after a well-known concept.

Still, the plurality-in-unity is an important distinguishing characteristic of organic life. An arm and a leg are what they are by virtue of coming together in an organic unity that is the body. Cut off from the body, they cease to be what they were. They become dead meat. The organism, likewise, has no meaning except as the plurality of its parts.

If capital is a living concept, then it must contain the defining plurality-in-unity attribute. Since as a concept, capital cannot be seen, we must first identify the “body” through which it operates, its sensuous manifestation, so to speak. Only such embodiment will lend itself to our inspection. We thus ask: Life to the human body is like capital is to what?

The answer is: corporation.

Legally, corporation, too, is a concept. But we must focus on the economic angle. Economically, a corporation could be large or small; industrial or financial, domestic or international. How could we tell such varieties from each other? The answer is: balance sheets. Corporations’ balance sheets are where the type of corporation and, with that, the composition of the capital in them, is registered.

Here is a sample balance sheet:


Look at the entries under Assets at the top. They include cash, inventory, plant and machinery, office equipment, etc. What is in common between these disparate items that allow them to be added as “assets”? (In large corporations, where the composition of capital is more complex, the asset items are even more extensive. Look, for example, at IBM’s balance sheet).

You know the “apples with apples, oranges with oranges” adage. Adding presupposes grouping. Grouping presupposes a commonality among the group members. What is the commonality between building, inventory, office furniture and cash?

The answer is that they are the constituting parts of capital the way arms, legs and organs are the constituting parts of the body. This point needs elaborating; the analogy might not be obvious without some background accounting. To that end, let us build a balance sheet from “scratch”. We follow an entrepreneur who believes he can make a good profit producing and selling some “widget”, say, a toy, a pen or a particularly cheap wristwatch. So, he takes out $10 million that he had stashed in a safe place, incorporates a corporation and begins work.

Let us assume that he spends $5,000,000 to build the plant, $1,000,000 for an office from which to run his enterprise and $1,000,000 for the office furniture, supplies, systems,etc. We further assume that he pays $1,500,000 for raw materials and $500,000 in wages to workers to produce 100,000 widgets. The final $1,000,000 he keeps as cash for the day-to-day operation of the plant. The entrepreneur has set the widget price at $25. Since 100,000 widgets are produced, their total price is $2,500,000. In accounting parlance, that is the inventory.

At that point, the company’s assets will look as follows:


Cash                                 $1,000,000
Plant/Equipment            $5,000,000
Office/Supplies               $1,000,000
Building                          $1,000,000
Inventory                       $2,500,000


Note that the assets add up to $10,500,000; $500,000 more than the money our entrepreneur advanced. How this magic is performed does not at present concern us. Our focus is on the conversion of money to capital and its unity-in-plurality.

Beginning with the conversion, note that cash – money – is not capital. Stashed in a mattress or kept in a safe deposit box, it would not multiply; it would not increase by a penny. Our entrepreneur knew that, which is why he took $10 million out of a safe and invested it in the widget venture.

In a like manner, the $1 million cash on the balance sheet is considered “working capital” precisely because it stands with the other components of the widget-producing capital. Taken out of that relationship, it becomes money again. It could be spent as money, but it will never increase in size.

The same reasoning applies to other asset items. The plant, for example, is a component of capital by virtue of being a place where widgets are produced – but only if there is an office from which to manage the production: dispenses cash, hire workers, raw materials, etc. Taken out of that relation, the plant becomes a storage for idle machinery. It eventually crumbles and dies, which is how the decommissioned plants are literally referred to in English. The town such plants once operated become, taking another word that is meaningful with reference to once alive bodies only, ghost towns.

The concept of capital, we see, then, can only be understood as the coming-together of various qualitatively different parts in such a way that the integrated whole is capable of internal growth. That’s how $10,000,000 became $10,500,000. That is the characteristic of an organic entity.

But, as in all organic bodies, it is not all quantity. There is a quantitative relation as well between the parts. A man’s head or heart can grow larger or smaller only so much before the distortion becomes fatal.

The relation between the various asset parts, likewise, must remain within certain quantitative limits. We intuitively grasp that point with regards to the plant or the office space. It would be madness for a small company to build a high-rise headquarter in an expensive downtown lot or a car manufacturer to try to squeeze its assembly line into an area one-half the size of what is necessary.

The relation of cash and inventory to other asset components is less intuitively apparent – because there is a supposition that “more money” can never hurt – but that is precisely when the abnormality in the body capital begins.

Look at the assets above. The company’s inventory is its lifeline. It was produced by workers who were paid $500,000 in wages and used $1,500,000 worth of raw material in the production process. The value of inventory is $2.5 million; $500,000 more than what went for its production. For that profit to be realized and for the process to continue – for which the entrepreneur must order $1,500,000 worth of raw materials set aside $500,000 in wages – the inventory must first be sold. The workers and raw material suppliers do not want widgets. They want money. Selling, converting inventory to money, is vital to the survival of capital. Hence, the pressure on the sales force and the resulting psychosis.

If the widgets cannot be sold at $25 each, they would have to be discounted; offered at say, $20. In that case, the entrepreneur would have advanced $2 million in wages and raw material to withdraw the same $2 million. That would be an absurd and pointless exercise and very discouraging to our entrepreneur. (We ignore depreciation and other such technical considerations that have no effect on our discussion).

If there are still no takers, the discount would have to be deeper; the widgets would have to be offered at say, $15. In that case, the capital would fall below its original $10 million. That would be the destruction of capital.

No sane entrepreneur would tolerate the condition of throwing money into the production circuit only to see it diminish in size. The logical step would be to curtail the production. If the demand for widgets is soft, in the next cycle our entrepreneur will produce only half as many widgets. Consequently, he will need half as much labor and raw material. In that case, two things would happen. First, the demand for labor would fall, with the result that unemployment would rise. That story you know. Second, the cash on the balance sheet would rise.

If our entrepreneur gets $2.5 million from the sale of his inventory but produces half as many widgets as before, he would only need to spend $1 million on labor and raw material, one-half of what he would normally spend on these items. In that case, even if he pockets $500,000 as before, $1 million surplus cash will be added to the balance sheet.

That is what has been happening in the US and the EU. Look, for example, at the “short term investment” in the IBM balance sheet (3rd from top) which is where the company has parked its unused cash. Or check out the balance sheet of GE under “cash only” (2nd from top).

The development is widely reported in the press as “cash hoarding” by corporations. But the labeling itself shows how little the problem is understood.

Look at this Yahoo analysis, for example, under the heading Largest Public Companies Continue to Hoard Cash at Record Levels. The writer complains that companies have “unnecessarily” tied up cash in inventory.

The men and a few women in charge of finances of large corporations are high ranking executives who oversee thousands of staff and billions of dollars of budget. They have bankers, advisers, consultants, traders and portfolio managers who keep them abreast of any change in the market. It is laughable to suggest that they might “unnecessarily” tie-up cash – and do so all at the same time.

Or look at this Associated Press story which begins this way:
Americans’ wealth last summer suffered its biggest quarterly loss in more than two years as stocks, pension funds and home values lost value. 
At the same time, corporations raised their cash stockpiles to record levels.
There is a relation between the decrease in the wealth of the Americans and stockpiling of cash by corporations, but not because of corporate wickedness, which is what the writer implies. Here is how I would rewrite the opening sentences to make the cause-and-effect relation clear: It is precisely because corporations were forced to raise their cash stockpiles that the wealth of Americans suffered its biggest loss.

Corporations’ cash stockpile has been increasing because they have been curtailing production. They have been curtailing production because their rate of profit has fallen. And this phenomenon has taken place across all industries. Imagine not being able to sell the widgets at $25 and having to reduce the price to $23, $21, $20 and then $17 and $15.

Under that condition, there would be no need for the same number of workers as before, and for the same office space and plant as before. They all must be reduced. The destruction of capital is thus set in motion. Depending on the severity and magnitude of destruction, the result is called a recession or a depression. From the Financial Times of January 9, 2012, under the heading Earnings growth falters for S&P 500:
US corporate earnings grew in the fourth quarter of 2011 at their slowest pace for more than two years … and are expected to slow even more in the first quarter of this year as profits are hit by global economic turbulence. 
The US earnings season begins today with Alcoa, one of the world’s largest aluminum producers, reporting fourth-quarter results after the stock market closes. Expectations of Aloca’s profits have been scaled back sharply in recent months … Alcoa said last week that it would take a charge of $155-$160m in the quarter for the cost of shutting down temporarily or permanently 12 per cent of its smelting capacity as it attempts to cut costs and respond to a weaker aluminum price.
(How about Alcoa’s cash position, you might ask – Alcoa, too? Alcoa, too. Click here and check out the first two asset items.)

Destruction of capital and what follows from it – the rise in unemployment, the rise in corporate cash holding, the fall in interest rates, the rise in the number of unemployed, the factory closings, the savage cuts to government spending, lowering of wages – are all effects of the same cause, namely, the fall in the rate of profit across the industries.

This fall is a “macro”, socio-economic phenomenon. It could not be remedied by the actions of individual governments or corporations. It required a socio-economic solution. The solution was the EU, whose raison d’ĂȘtre is increasing the labor productivity principally through lowering its costs. That is what the EU is fundamentally all about. Everything else about it is incidental.

Why the profit across industries fall is a subject of Vol. 4 of Speculative Capital.

But I took a long detour to touch upon the composition of capital and corporate asset structure to highlight a point that I have made above only implicitly.

Capital is a social, living concept. Its components – workers and communities clearly, but also plants and buildings – are likewise social. They are the parts of body capital.

As long as capital is “alive”, as long as it is humming along and producing an agreeable rate of profit, there is prosperity. Men are employed, there is money to go around, cities are booming and everyone is happy.

When capital is destroyed, when it dies, the components die as well. Plants become idle, corporations go bankrupt, ships rust, towns become ghost towns and men become unemployed, poor and desperate.

To prevent such outcome, one must keep capital alive.

But capital is inherently self-destructive.

Now how do you deal with this menace?

Chekhov’s experience points the way. In his trip to the hellish Siberian penal colony, the perceptive author of Sakhalin Island learned that one must be extremely careful in taking on evil – careful not in the sense of being timid, but in the sense of knowing what to do and how to act. Not infrequently, the solutions which seem obvious on moral or social grounds make matters worse because they flow from the wrong diagnosis of the ills. If you believe, for example, that greed and corruption of bankers and financiers caused the current crisis, your solution would be to put God-fearing Christians and men of good moral standing in charge – men like Gingrich and Santorum.

Hence, the critical role of the theory which helps us see the cause. Theory delivers us from the passive acceptance of events just because they are and allows us to influence them by anticipating where they are heading.

Which brings me to our main subject.

There is a tremendous amount of noise around the EU. If you are following the goings on in your local paper, it is impossible to make head or tail of it. Some of the issues, like the imposition of austerity budgets, pertain to individual countries and local governments. Others, like the possibility of the EU members issuing eurobonds, are technical subjects of concern to only a small minority.Then there is the rumor of Greece going bankrupt. Then, Portugal. Spain, too, perhaps. The euro will survive. Strike in Hungary. The euro will not survive. France downgraded. Cameron blew it. Merkel is resolute. Sarkozy says the point is moot. ECB, Ireland, Draghi, England, Finland, the European Commission, the European Council. (Do you know the difference?)

It is truly confusing, even without the constant stream of nonsense that poltroons in the media and academia produce on the subject.

But, relax, I say! This undulated European phantasmagoria arises from a falling rate of profit and the efforts of capital to check and reverse it. When you see that, the chaos disappears. And that, our theory, has been made easy to see. Substitute the PR approved positive words “growth” and “productivity” for it and you will see it everywhere. From the Financial Times of January 9 under the heading Berlin and Paris move growth to top of agenda:
Germany and France are set to propose measures to revive economic growth in Europe and reduce youth unemployment, including actions to increase cross-border labour mobility, to complement budget discipline and debt reduction in the eurozone…. France wants measures to make it easier for workers to move between countries, for example from Spain, with 40 per cent youth unemployment, to Germany, with falling unemployment and a skills shortage.
(Why is France concerned about Spanish youth finding employment in Germany, you ask, and why youth, when the adult heads of household are unemployed in millions? Because young workers, especially foreign, emigrant, young workers, could be hired at lower wages. In this way, they help reduce the general labor costs, just like women do.)

You want more? Headline from the Financial Times of January 6:

Sarkozy seeks to cut labour costs before election

More, still? Google “labor productivity in the EU” or “labor productivity” in general. You will see!

If you do not know this driving force behind the events, you will get in its way and get crushed. Just ask Viktor Orban, the Hungarian prime minister.

Dimly aware that under the EU mandates the country was losing its sovereignty, he introduced several mild measures to the country’s constitution which included supervision of the central bank by the government. That was a red line. Central bank “independence” is the primary control tool of finance capital as I explained in Vol. 1 of Speculative Capital. The quote from a New York Times editorial which I provided then, with the comment about the audacity of the government thinking of controlling the supply of money captured the gist of the issue. Here it is. For “investors in financial markets” read finance capital.
In May 1997 ... under a descriptive heading, “Divorcing Central Banks and Politics: Independence Helps in Inflation Fight,” [the New York Times] wrote:
In granting more independence to the Bank of England, the new British Government is a later entrant in a trend that has seen nations give increasing autonomy to their central banks, distancing monetary policy from direct political control. The practice has spread across the globe in response to demands from investors in financial markets for proof that governments will remain committed to inflation fighting … The trend toward independence is rapidly eroding the practice, common only a few years ago in nearly all nations except the United States and Germany, of regarding monetary policy as the responsibility and right of the government of the day.
So controlling the supply of money and rate of interest is no longer deemed to be the responsibility of governments! 
But how would a Hungarian know that, fresh from behind the Iron Curtain? He thought he had arrived because Hungary was a NATO member. He thought he had endeared himself to Sarkozy by preventing the plane carrying the Iranian foreign minister to land in Hungary for refueling. See Nicolas, we’re on the same side!

He must not have been prepared for what followed. From the Financial Times of December 21, 2011:
The International Monetary Fund and European Union have warned Hungary that they will not return to the country to negotiate a new credit facility unless Budapest commits to modifying two draft laws. 
EU and IMF officials broke off preparatory talks with Budapest a day early last week, after Hungary’s government moved to push the laws on central bank reform and fiscal stability through parliament despite negotiators’ concerns. 
One person familiar with the situation told the FT that negotiators had been “explicitly clear to the government” before the talks about their concern... 
In a letter sent to Viktor Orban, Hungary’s prime minister, by Jose Manuel Barroso, European Commission president, and described to the FT, Mr Barroso “strongly advised” Hungary to withdraw the two draft laws. In unusually blunt language, the commission president observed that Hungary’s domestic policy, and not the broader European debt crisis, were the origin of the country’s financial and economic difficulties.
Look at the message: How dare you enact laws without our permission?

Look at the tone: The unusually blunt language, of the kind one uses to train dogs, to make sure that the Balkan understands the seriousness of the issue.

Look at the attitude: You people are the cause of your own misfortune.

Then the name calling began: Orban the Stalin, Orban the Mao. Orban the tyrant.

Then people came out to warn against the erosion of democracy.

Prime Minster Orban should have known that bargaining with George Soros is a two-way street.

Naturally, he gave in. He had the good sense to realize that fighting against the Soviet tanks in 1956 must have been easier. At least then there was a target one could throw a molotov cocktail at. How do you fight finance capital?

That is why I am nonchalant about events in the EU, which explains why this series has taken 6 months to complete! The almost daily crisis alerts and headlines are not for me. They are for traders to exploit the situation and net a basis point here and there. Or for telegraphing one’s position in upcoming negotiations. Or sending a message to politicians. In all events, they are a sideshow, which is why they leave me unmoved.

The real event is the march of capital towards the higher rate of profit which will continue resolutely, unabatedly and without regards for consequences.

What happens if in the process Greece defaults? Well, what happens if a Sanchez or a Brown dies in a war somewhere in the Middle East? Nothing happens. Life would go on.

What happens if Spain defaults? The same, meaning that nothing happens to the march of capital towards higher rates of return. People will not doubt get hurt but to make omelet you have to break a few eggs.

What if Hungary breaks away from the EU? Let them. They are begging to be made an example of. They will see what it means to pay back euro and Swiss franc debt in worthless forints.

And if euro does not survive? So it won’t. People lived for centuries without the euro.

But surely there is a concern for the EU breaking apart?

No, there is not. There is a fall back plan. We’d go back to the “Anglo-Saxon Model”.

The “Anglo-Saxon” model which the U.S. has adopted is, in a nutshell, based on the principle of refusing to pay for the cow when you could have the milk for free. In practice, that translates to bilateral agreements with individual countries, enabling the US to take advantage of low labors costs there without the hassle of integration. The North American Free Trade Agreement is Exhibit-A in that regard. NAFTA guarantees the free movement of capital across US-Mexico border but actual Mexicans are prevented from coming into the US. A combination of walls, thugs with guns and immigration offices see to that.

That is also the UK’s ideal. Hence its general displeasure with the EU, especially as it puts British manufacturing at a disadvantage compared to Germany’s. Under the circumstances, see how a total Mr. Establishment, in the person of Derek Scott, economic adviser to Tony Blair and the vice-chairman of “Open Europe” writes like a member of Occupy the Wall Street. He wrote in the FT, under the heading Germany is the loser from Greece’s wriggle:
More than 20 years ago, Nicholas Ridley was forced to resign from the British cabinet for describing economic and monetary union as a “German racket” … In so far as Mr Ridley’s “racket” had substance, it reflected the implicit collusion between German manufacturers, bankers and politicians.
At least I do not believe in conspiracies! Hell hath no fury like an Englishman left out of a racket.

So, is the EU a fait accompli?

Yes, it is.

But there is more.

In a scientific experiment, we disturb the natural state of an object and force it to react to new, specifically created conditions. In so reacting, the object reveals new properties and thus, enhances our knowledge of it.

As with objects, so with societies. The EU is an economic end in itself. But it is also a complex project in social engineering, not so much by design but because of the consequence. Like objects, social organisms, too, when disturbed, react to new conditions in ways that were not known, anticipated or contemplated.

We have not heard the last word on the subject.

Stay with me.

Saturday, January 7, 2012

The person behind the web site . . .

I love reading personal finance topics on line and there are so many GREAT sites out there . . . if you were like me, have you ever wondered who the person is behind the site ?

So I started trying to know more a bit out the person behind the web site - I asked for their permission for me to conduct an email interview with them.

First I sent out an interview request like this.  Not everyone replied of course, but I manage to get a few reply from the sites I love most ....



( click on the paragraph title to view original interview scripts )

Champdog
He is most probably one of the person whom I know the longest in real life.  A young guy who shared his true belief and through out his blog sharing, you can see he is making an excellent progress toward finance independence if not already is.  Although I know him the longest among all other bloggers or web site owners, until today I don't remember his web site URL.  I just google search "Champdog Finance" and usually his come up at the top.  May be its time he re-brand his blog !? :)


CP Teh
CP is in education line.  With his intuitive interest and strength in Math, he shines out an interesting charisma on Technical Analysis in stock market.



KC Lau
I am sure KC Lau needs no further introduction.  It was KC who gets Meshio to blog whom I asked advice from the very first time I started out sharing my stories.  My years of calling KC the pioneer and the guru of the gurus in Malaysia Personal Finance blogsphere has never been challenged.

Although I am nowhere near his success, but I always thought my life path share quite some similarities with his.  Frugality is within our bones but we treat ourselves quite well from time to time :D


Chong
I always think accountant who also pursue personal finance is a best match of skills.  After he help you fix you yourself, he can help you build an empire too. :)


Gabe
Through out years and years of constantly reviewing personal finance web sites, Gabe's always stands out to be the easiest and most browser friendly site.  Simplicity says it all.


Alan Tan
Alan is another blogger who needs no further introduction.  Not just personal finance, he shares pretty much everything interesting that he came about; and carefully shape his marketing so that people always find his articles first.  I always ask my lover to read my blog but she always end up reading Alan Tan's blog even without realizing it. :D


Kris
Its hard to find a lady in personal finance blogsphere ?  So she claims but I didn't even realize any gender differences in internet until this was brought up.  She likes Sabah so I like her :)


Fathersez
Although this is no longer an active site but its one of those things in life.

What have you done ?
What are you doing now ?
What do you wish to leave behind ?
What have we actually left for others ?

Eventually we all will join Fathersez . . . and how would the world remember us by ?



There were quite a handful objectives I was planning initially when I thought of this interviewing project.  But unfortunately most of my thoughts did not materialize well.  Mostly that is due to my in-experience to conduct email interview - my questions were not well formed and many were answered from a different perspective than initially intended.  For example, how would you answer this question ?  Please do leave your answer in the comment section.

"You met someone in a social party, describe what you do in 2 to 3 sentences."

However, I did manage to realize 2 interesting findings through this exercise.

  1. Most of us blog or create a web site just for the sake of sharing.  Seldom do we realize how precious it has become and we never thought of keeping our blog/site to live forever, even beyond us.  And to achieve that is nothing harder than setting up a trust ourselves.  Which can be easily done once you have the know how.  Check out kclau's interview respond and search for "set up a trust".
  2. Most of us here who are giving out truthful sharing here share some similar background
    • We came from a middle income family, not so poor, not so rich ... ok may be a bit poor.
    • We learn to be frugal from our parent
    • We "save" quite well, thanks to parental influence
    • But we learn to "invest" after we have gone through our lives ourselves
    • Now our saving part is saving us from our investment swing
      • About there - financially independent !?
    • We do ok now and we start to pamper ourselves from time to time :D
      • Opps, drop back to rat race !?


Alright, thank you very much for reading so patiently up until here.  I know its another boring wordy post.  But I have decided to keep this boring wordy style.  After all, everyone will have a cup of his own tea :)

And I haven't found any other ways to embed a message where a reader hates to hear now but would realize and appreciate it years later.


Next article : scheme vs scam