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Monday, 28 April 2008

Be ready for stagflation anytime soon!

28th April 2008 - I believe we are now in “de fact” mode that out country is in a state of stagflation. I'm predicting a hard time for all Malaysian especially in consumer spending looking at the oil prices that might and will reach USD$150.00 per barrel in two months time and all hell will break loose in July/ September 2008.

The current situation in U.S. might transpire anytime soon in Malaysia where people don't drive anymore to go to the consumer stores/ outlets/ hypermarkets which will result in stagnant economy and inflate the basic necessities (such as happening now) surely affecting our consumer spending. When the crude oil reach USD$150 per barrel in two months time such things will surely come into reality:

1) The collapse of air travel where people couldn't afford anymore to spend in air travels either it be Air Asia or MAS (to say that such air carrier still can contain the upsurge of the oil prices would be wishful thinking) and this will bring to the collapse of those two airlines systems alongside its hundred thousand of employee and support staffs;

2) The dwindling of the tourism industry where people don’t travel anymore and this will further stagnant the hotel industry bringing down its hundred thousand of employees and support staffs;

3) The “beggar thy neighbour policy” adopted by the neighbouring countries such as Thailand and Vietnam which banned the agricultural products exports will only aggravate the negative impacts of consumer spending and contributes towards the spiralling price increase;

4) Unsustainable petrol and diesel subsidy (it ain't logic for the government to keep on subsidizing the petrol and diesel which had reached triple psychological barrier since 2006). The first psychological barrier was USD$60 per barrel, second was USD$100 per barrel and third will be USD$150 per barrel;

5) There will be a swelling of non-performing loans (NPL) which will instigate banks to adopt credit crunch regimes and further escalating our consumer spending problems;

6) Our friends in BPDN and BPGK surely will be in full hands 24/7 in countering such unsustainable problems and may God help them in such a holy endeavour. Perhaps triple the current problems since the triple effect of the psychological barrier; and

7) I’m predicting a percentage increase of marital problems, suicidal case, surrendering of cars to banks and job retrenchments come six months after the first economic explosion somewhere in January/ February 2009.

Such economic problems will only be add up by further damaging policy which will see more downcast of the consumer spending woes such as:-1) The cancellation of the infrastructure projects that will further sluggish/ damage the nations economy especially in bringing to a standstill of the previous economic plans;

2) The absentee of the new innovative products which can be marketed and can contributes an upward trend of the consumer spending (such as in consumer electrical appliances in 1980’s, computers in 1990’s, hand phones and high tech gadgets that play a major part in kicking our economy);

3) The sub-prime crisis in United States which will sink/ counter effect the positive fiscal policy attempt by the Third World Countries in mitigating the problems;

4) The lack of domestic investment house in Malaysia such as Morgan Stanley/ Greenhill and Co./ Rostchilds & Sons) that can play a vital role in advising Malaysian in risk management facing the impending financial problems; and

5) No political will in addressing this issues (forgive me if I’m wrong but I haven’t seen any) My advise to you all on things that we can do in managing the upcoming economic crisis:-1) Put a halt first in any intention of investments such as buying assets such as cars, lands or house. At least not until 2010/ 2011 when the default's subsides. The best investment at the moment is to buy government bonds, but pity I didn’t see any efforts from the government itself to introduce any.

2) I believe it is the best time to strengthen our family values and mend back the fences because unlike from other nations, Malaysian can refer/ seek or go back to their family in seeking financial help when financial problems occurs (such things will surely help to mitigate the internal economic problems);

3) One of methods for us to deal with these economic woes is to consider car pool or utilizing the public transport since people cannot afford anymore to travel by their own cars. Start to identify friends that can car pool with you. Personally I believe when the oil hit USD$150 dollar per barrel some of us may have to travel by motorbike and bicycle (no kidding) all the way to work;

4) The best way perhaps is not subsidising more, but perhaps when such things hit us, we can introduce cuts in public transport charge perhaps for layman, pensioners and the re-introducing of the free food programmes in schools;

5) The most important of all is that for us not to panic and not to live in fear, thus fear will only worsen the situation. We have to be cautious in spending and live life as usual but prudent and don't take things for granted anymore. I'm predicting we'll be in economic problems in three months times and the latest is in July or September 2008.

I’ve cut myself clear on this one; call me pessimist or having a dark cloud over me, but I don't make up the data, merely just interpret it and being realistic, at least somebody warn you before it happens. Just follow the oil trail.

Feel free to mail me should any question arise from this email. Let's hope and pray that I'm wrong on this one and I’m surely wanted to be dead wrong on this one! - By: AHMAD SYAH EJAZ BIN HJ. ISMAIL.

1 comment:

afif said...

That's not pessimist, that's "paranoid".

Relax mano, have faith in the market economy, it'll correct things by itself. It wont be as bad as you thought it'll be

Why you think we have to use motorcycle or bicycle in near future? Don't forget that we have one of the modern world marvel: it's called Perodua Kancil!! Saves fuel you know, maybe you should trade in you Red sedan with Kancil. Many people did that already, at least one of my family member did.

Why, Kancil is not up to your standard ke? Forget about it, when price oil jumps up, many people going to drive small car. They just don't care anymore. Better buy now before the small cars price hikes up in future

You see, why our public trans is not as good as in other country is because the lack of government investment into this sector. Mind you that this has been done purposely for the sake of protecting our Proton. Public trans also can be a substitute goods for Proton, that's why Tun Dr refused to pour much taxpayers money on the public trans. He wants to protect and spoil his Proton baby boo from 'mature' equal competition

As I said, relax, it wont be too bad

Faces of Tun Teddy

Faces of Tun Teddy