reflections
kyouwa, watashiwa ureshii desu.
Today's Straits times had one of the better articles of the month. They summarised and explained in a clear fashion the causes and effects of the financial crisis now evident in the world. And i discussed what short selling is with my dad and learnt a new concept in terms of economics. Short selling means to sell stocks that you don't already have. It can be thought of as borrowing stock from someone and selling it before the prices drops and rebuying them and returning the stock. While u pocket the difference. In other words, you are making money out of nothing. Of course if the share prices appreciate, u are finished. For example, My dog goes to singapore stock exchange at the start of the day and sees datahush technologies prices at 100 dollar per unit, which apparently is quite high, and my dog anticipates a fall in stock prices by the end of the day, so my dog will file a scrip to sell 1 share for 100 dollars. Although my dog actually doesn't have any share, he kinda owes the company 1 share which must be returned at the end of the day. So at the end of the day, lets say the stock price falls by 20% to 80 dollars, which is a huge loss. My dog buys back the stock which he owes. Effectively he pocketed 20 dollars and literally no transactions were made. Short selling is a main cause for the rapid dip in stock prices and consumer confidence in the US market now adays. What better way to earn pocket money for more toto treats=)
In view of credit crunch and huge bailouts of catastrophic levels, is such repeated and increasing dollar billed safety nets sustainable? The recent US$500billion bailout is equivalent to more than twice of singapore's total assets. (but it actually is pweanuts compared to what US spends on bullets). At some point in time will the government be unable to pay and will run out of money. And these large american banks will now have to offer the filthy rich Middle eastern nations and even China, both with GDPs in the 10^9s. Unimaginable, lehman brothers bought by china will be renamed to LEE brothers, and morgan stanley bought by saudi arabia will be renamed as Mohamad stanley. citi bank to siti bank etc... but not like thats gna happen. cause that would be like singapore selling temasek holdings to malaysiaXD.
Since the 1990s, it was incredibly easy to make a housing loan. Practically anyone whos earning an income will be qualified to make a housing loan. In those good times of property boom, it wasn't a problem for the American banks as if consumers were to default their debts, the house can be mortgaged and the capita recovered. Competition grew and banks started to offer and loosen their borrowing criterias until they accumulated much debt. But that wasn't the problem. Forced to produce growth, the smart americans packaged these good deals as an investment portfolio to sell it as a financial product to other banks and asian/european banks, (at the same time making the problem global). Now this is quite complex, i shall give an example, I am now the CEO of the bank of America(sounds kinda cool) and i have exhausted all my bank's credit in lending money at high interest rates. Forced to produce growth and income, i tink of an ingeunious solution and treat these debts as a product and sell them as investment opportunities, another bank, seeing this as a good opportunity(approximately return rates of 8%) buys them at incredibly high prices. Sparking an investment opportunity demand explosion, US bankers, flooded with this demand, began to offer loans at subprime rates, meaning loans of massive amounts to people whom have no evident income. this wasn't the problem yet. soon the debt accumulated, but could be saved by the appreciating property prices.
All hell was unleashed when the property prices crash, like all other cyclical events this sparked people to stop borrowing, consumers to void their homes, and suddently all these banks are ridded with these bad debts and large amounts of property. Meaning they have alot of cash in terms of property, which are worth almost nothing(at that point in time). So now they have no money to pay their workers, no money to continue with business. If these large banks can hold out for another year or too when the property prices recover, all will return to normal. but the problem is who can last this long. Now you may be wondering if all the money is gone, where has it gone to, well it has all gone....into MY DOG'S POCKET. No no he doesn't have one haha, it went to the property developers who sold it at ridiculously high prices which home loaners bought and banks lent which led them to having their current ridiculously high debts. An ideal situation would be that these property developers buy over the banks and the credit would return but of course, who would be so dumb to do that, in the name of coporate social responsibility. If that were to happen, it'll seriously be greens "beating about the bush".
Oh did u guys know that my dog has a microchip in him, one day at the vet he was shot with a gun loaded with not bullets but microchips the size of a rice grain. For identification purposes in case he commits a crime, such as peeing on the floor, which he is sentenced to 2 strokes of my palm and 2 hours of jail time in the back yard. but my mom often bails him out with a chocolate bar or so. Im easily bribed. Oh and i fall in love easily, its my nature to have my heart easily won. Time for bed. Ohhh how i miss the taste of chocolate, ice scream, curry puff, laksa, rotiprata, garlic chilli from macdonalds, and of course....french fries with extra salt. I can't touch any of these for i am growing and preserving my youthful and radiant skin(not that i have it). I must eat nothing but fruits and vege, and drink nothing but di hydrogen oxide.
Nothing particularly interesting happened today. Just a peaceful, slow paced sunday where i played piano, ate, rub my dogs tummy, ate , played piano, play com, rub my dog's tummy, went for tution, come back ate, played piano, feel like rubbing my dog's tummy, blog. heres some pictures of my girls, well not exactly mine but im jus a fan. and thats exia.
Lame comment of the day: Lee man brothers(china), mohamad stanley(arab)
~datahush vi britannia commands..
10:25 PM
past memories
August 2007
August 2008
September 2008
October 2008
November 2008
December 2008
January 2009
February 2009
March 2009
navigations
About me..
FriendS..linked
REFLECTIONS
music craze
speak up
credits
Host : blogger
Image Host : photobucket
Brushes : atomica, aethereality, portfelia
Thanks to : blossom, bouncy-bubbles for the images! :D
