Yesterday Lehman Bros filed for bankruptcy. Price came down 93% since 1-year ago. Today, I'm jolly pleased that Barclays (who walked away from talks to buy Lehman) came back to renegotiate especially the broker-dealer side. That helped a bit. But then another tragedy wacked us today. AIG, the biggest insurer in the world, is in the brink of bankruptcy due to sub-prime mortgage. The stock price crashed by 95% from over USD70 a share to around USD3 a share. So the Federal Reserve had to come up with an USD80 billion rescue package to avoid AIG filing for bankruptcy today. Gosh! That's why they say - The bigger you are, the harder you fall.
How big is AIG? Picture this: its total asset was worth USD 1 trillion. Note that the US GDP is around USD 13 trillion, making AIG’s asset about 7% of US GDP. AIG employs over 100,000 worldwide spanning 5 continents.
So thanks to the US tax payers, another major catstrophy in the financial world has been avoided. But wait a minute .. isn't it more like the rest of the world esp. Japan & China, who are financing this deal? Picture this - Fed need electronic money to finance this rescue (you call it "rescue" if its developed market, and "bail out" when its developing markets like Malaysia), the Fed will issue more bonds (which essentially are debts) which are mostly snapped up by countries with high savings rate like Asian countries. Hmmm .. might as well I go and ask Khazanah to do the bailing out.
Now, where's that small kitab? I need to go talkin kan my equity portfolio.
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4 comments:
wow Bro wa ske nak tau tentang ini. Tapi wa tak faham. maksudnya, siapa ada duit dalam asn asb tu keluarkan lah ke? mana tempat selamat nak letak duit? (cheh tanya macam duit simpanan berjute)
RM5K = RM3.8K aje? My financial advisor told me so...(cheh macam ada berjuta pulak)
Skim amanah harga tetap e.g. ASB, simpan je la. Liquidity problem ni tak hit Mesia .. tak pe. Lagi pun AIG pun kena bail out. Kalau apa2 jadi kat PNB, highly likely govt won't let confidence crisis escalate.
as for RM5K = RM3.8K, that may be true if your investment rate of return is say 3% while inflation rate is 27%. If you believe that equation is true then that's what your RM5K is worth in 1 year's time. If that is the case, simpan duit bawah bantal will lose you 27% while simpan dlm bank will lose you 24%.
Hadoii but thanks all the same (masih garok paler nih).
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