Friday, November 25, 2011
Sunday, October 3, 2010
SHORT SELLING - BY DR. MAHATHIR MOHAMED
1. Some people in Malaysia particularly those involved with the stock markets seem keen to legalise what is called "short selling". Basically short selling is about selling shares or currencies or other assets that the seller does not have with the expectation that the sale would push the prices down. Once the price is down the seller would then buy to deliver to the earlier buyers he had sold to at a higher price.
2. Short selling is not speculation. It is manipulation of the market with almost certain success to be had. Other investors or buyers would lose money as they would be left holding the devalued shares or money or whatever.
3. Malaysia had banned short selling in the past. We regarded it as unfair and damaging to genuine investors.
2. Short selling is not speculation. It is manipulation of the market with almost certain success to be had. Other investors or buyers would lose money as they would be left holding the devalued shares or money or whatever.
3. Malaysia had banned short selling in the past. We regarded it as unfair and damaging to genuine investors.
4. I read in the Financial Times of 24th May that "Europe plans ban on naked short selling". Angela Merkel, the German Chancellor has unilaterally banned "naked shorting of Eurozone sovereign debt instruments and shares of 10 German banks". This has caused a "financial turmoil" meaning the short sellers are unhappy that they cannot manipulate the market anymore. Merkel asked how people can sell something they don't have.
5. The Europeans and the Americans are still hoping to keep all the "financial products" which they must know are what precipitated the current crisis. They are still refusing to review, modify or discard the monetary, banking and financial systems that they had devised and which they abused in order to get rich quick.
6. If we in Malaysia or other developing countries were to have this state of mind, then they would say that we are in a state of denial. And some locals will also echo their words.
7. I have no say in the Government but I think Governments should take note that not copying the West is not a sure recipe for failure.
8. In fact we should not consult Western people in the running of our country. They don't know our situation and their advice would not be good for us.
9. And we should note that even when they know a lot about the affairs of their own countries, they often bungle things. It is they who messed up the world's finances.
10. We are not always right of course. But I think we know our situation better than foreign consultants. We know our situation and the character of our prople. What may be good for the West may not necessarily be goof for us. Besides we know now that the very developed west can make very many horrible mistakes.
11. I will leave it at that.
5. The Europeans and the Americans are still hoping to keep all the "financial products" which they must know are what precipitated the current crisis. They are still refusing to review, modify or discard the monetary, banking and financial systems that they had devised and which they abused in order to get rich quick.
6. If we in Malaysia or other developing countries were to have this state of mind, then they would say that we are in a state of denial. And some locals will also echo their words.
7. I have no say in the Government but I think Governments should take note that not copying the West is not a sure recipe for failure.
8. In fact we should not consult Western people in the running of our country. They don't know our situation and their advice would not be good for us.
9. And we should note that even when they know a lot about the affairs of their own countries, they often bungle things. It is they who messed up the world's finances.
10. We are not always right of course. But I think we know our situation better than foreign consultants. We know our situation and the character of our prople. What may be good for the West may not necessarily be goof for us. Besides we know now that the very developed west can make very many horrible mistakes.
11. I will leave it at that.
FOUR TRILLION DOLLARS - From Tun Dr. Mahathir Mohamed
1. How much is 4 trillion dollars? Star Business picking a report from foreign source says it is the value of Germany's total output for one year.
2. I try to imagine the figure 4 trillion and wrote it down. It is 4,000,000,000,000. It is a lot, a great lot of money. But it is just the amount of dollars traded by the currency traders in just one day.
3. Yes, the currency traders are still at it, worldwide financial crisis notwithstanding.
2. I try to imagine the figure 4 trillion and wrote it down. It is 4,000,000,000,000. It is a lot, a great lot of money. But it is just the amount of dollars traded by the currency traders in just one day.
3. Yes, the currency traders are still at it, worldwide financial crisis notwithstanding.
4. Four trillion dollars worth of business in Germany in one year creates millions of jobs; spawns businesses big, medium and small; move millions of vehicles and trains, support a rich and highly developed Germany and the people of the country and much more.
5. But what does 4 trillion dollars in currency trade do? Apart from enriching a few players, nothing. No jobs are created, no businesses, big, medium or small spin off; no enhancement of international trade, no movements of goods or people, no sailing of ships or flights of aircraft, nothing.
6. 4 trillion a day and there are 365 days a year giving a total of 1,460 trillion or 1,460,000,000,000,000 in a year. So much money. But can we estimate how many of the earth's 6.5 billion people benefit?
7. But currency trading can also do damage to millions and millions of people, destroy whole countries, bankrupt businesses and banks and cause recessions. We know because it happened to us in 1997-98. We know because currency trading is one of the causes of the current crisis.
8. What kind of system is this that permits and protects a few people at the expense of millions of helpless people, their countries, their businesses, their societies and their well-being. Is this what capitalism and free trade is all about?
9. I saw Mike Moore's latest film, "Capitalism - A Love Story", and was appalled by the crudeness of people playing with money.
10. People free from financial problems are persuaded by banks to mortgage their fully paid up homes so that they can have money to invest and make more money. The investments fail and there was no money to redeem the mortgaged home. The banks took posession of the homes and the previous owners were forced to move out. But they had no money left and could not even rent a house, Thus a house-owner is rendered homeless.
11. This did not happen to one person. It happened to millions, The banks now own millions of houses. But nobody has enough money to buy them, nor can they borrow money to buy. Simply put the banks cannot get back the money they had lent and the banks fail. That is part of the story of the subprime loan failure which triggered the current crisis.
12. It is now nearly three years since the current crisis began. Every now and again the experts will claim that the crisis has bottomed out. But then news came that the crisis is still on.
13. Now there is talk of a double-dip, of the recession going on to another recession. This is very likely simply because nothing is being done to stop the activities which led to the crisis. As we can see currency trading is still going on, if anything, on a larger scale. Much of the bailout money, billions of dollars worth, has produced nothing worthwhile. The bankers and their people have used a goodly sum of the bailout money for hefty bonuses, the hedge funds are still active and so is presumably the "leveraging" and many of the gambling that lead to the crisis are still in place.
14. The leaders and their financial advisers in the great capitalist countries have learnt nothing. They continue to support the gambling and the manipulation. They are still influenced by their uncontrolled greed.
15. The worldwide recession will not end until Wall Street ceases to control whatever Government the United States and the United Kingdom may have.
5. But what does 4 trillion dollars in currency trade do? Apart from enriching a few players, nothing. No jobs are created, no businesses, big, medium or small spin off; no enhancement of international trade, no movements of goods or people, no sailing of ships or flights of aircraft, nothing.
6. 4 trillion a day and there are 365 days a year giving a total of 1,460 trillion or 1,460,000,000,000,000 in a year. So much money. But can we estimate how many of the earth's 6.5 billion people benefit?
7. But currency trading can also do damage to millions and millions of people, destroy whole countries, bankrupt businesses and banks and cause recessions. We know because it happened to us in 1997-98. We know because currency trading is one of the causes of the current crisis.
8. What kind of system is this that permits and protects a few people at the expense of millions of helpless people, their countries, their businesses, their societies and their well-being. Is this what capitalism and free trade is all about?
9. I saw Mike Moore's latest film, "Capitalism - A Love Story", and was appalled by the crudeness of people playing with money.
10. People free from financial problems are persuaded by banks to mortgage their fully paid up homes so that they can have money to invest and make more money. The investments fail and there was no money to redeem the mortgaged home. The banks took posession of the homes and the previous owners were forced to move out. But they had no money left and could not even rent a house, Thus a house-owner is rendered homeless.
11. This did not happen to one person. It happened to millions, The banks now own millions of houses. But nobody has enough money to buy them, nor can they borrow money to buy. Simply put the banks cannot get back the money they had lent and the banks fail. That is part of the story of the subprime loan failure which triggered the current crisis.
12. It is now nearly three years since the current crisis began. Every now and again the experts will claim that the crisis has bottomed out. But then news came that the crisis is still on.
13. Now there is talk of a double-dip, of the recession going on to another recession. This is very likely simply because nothing is being done to stop the activities which led to the crisis. As we can see currency trading is still going on, if anything, on a larger scale. Much of the bailout money, billions of dollars worth, has produced nothing worthwhile. The bankers and their people have used a goodly sum of the bailout money for hefty bonuses, the hedge funds are still active and so is presumably the "leveraging" and many of the gambling that lead to the crisis are still in place.
14. The leaders and their financial advisers in the great capitalist countries have learnt nothing. They continue to support the gambling and the manipulation. They are still influenced by their uncontrolled greed.
15. The worldwide recession will not end until Wall Street ceases to control whatever Government the United States and the United Kingdom may have.
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