Showing posts from April, 2012

Exclusive Interview: 2011 8TV Hot Chef (美食型男) Jason Cha

Dubbed as one of the most handsome guy among the participants of popular 8TV shows Hot Chef (美食型男), Jason emerged as the ultimate winner, not by his look, but his cooking skills. Since then, he became a familiar face in Malaysia. Did you recognize Jason shopping at Mid Valley lately?

In order for us to understand more about him, below are some of the his personal details: Full Name            : Cha Kian Heng Age                      : 34 Hometown           : Ipoh, Perak Status                  : Married Hobby                  : Collecting Thai Amulets Favourite Foods : Italian Pizza with many many cheese Favourite Sports : Badminton Favourite Sportsman : Fernando Torres (football player of Spain and Chelsea currently)

The Interview:
Q: What makes you decided to join the 8TV's 2011 Hot Chef competition? I think the most important decisions normally associated with the most important people around us. Due to the encouragements from my family and girlfriend (now is my wife), I take up the challe…

Who Should Pay for Higher Education?

It seems so easy to say that states should provide more support for public universities, but should they?  Who pays if the states pay more?  The answer is: the average taxpayer.  Why shouldn't the student attending the university foot their own bill.  Why should a taxpayer who is not attending and who may or may not have children attending pay to subsidize college students?

"We all benefit" is the usual refrain.  But, is that correct?  Does the average taxpayer benefit when Joe Dough gets a sociology degree from Alabama Polytechnic Institute, while sudsing his way through four years of school?  Certainly, the local bars in every college town would like to see higher subsidies by taxpayers for higher education.  They know where the poor college student likes to spend his/her own money.  Visit any major university and check out the attendance records in a typical class these days and you might wonder why taxpayers are subsidizing a lot of empty seats.

The usual principle is…

The Cradle of Civilization?

Civil society is breaking down in Greece.  Riots, civil anarchy, violence and a rapidly descending respect for the rule of law is being played out on the streets of Athens daily.  What once was the "cradle of civilization" is now a country descending into barbarism.  The road to anarchy is often paved with good intentions.

Left wing governments for three generations, originally inspired by the American-trained economist Georges Papandreou, have fought the fairness battle -- the same battle that Obama is engaged in today -- and Papandreou emerged the winner in Greece.  They got what they wanted -- a bloated government, a massive government bureaucracy, and promises of fat government retirements and free health care for their citizenry.  They got it all.  They had the same dream that the Obama folks have in the US.

Now we can see clearly where that dream takes you -- the modern nightmare that is Greece and will soon expand to Portugal, Italy, Spain, France and, yes, even Germany…

So, What's the Deal With Corzine?

Just because Corzine is an Obama supporter, is he going to get a free pass?  Madoff should have thought of this: "hey, it was just an accident!"  Or, perhaps: "I never intended to mislead anyone."  Would that have gotten Bernie Madoff a free pass?  I don't get why Madoff is in jail and Corzine is free as a breeze.

It looks like Corzine is getting a free pass on the $ 1.2 billion of customer money that disappeared on his watch at MFGlobal.  If there is a difference between what Corzine did (presiding over the looting of customer accounts, protected by law as segregated from firm accounts) and what Madoff did (running a ponzi scheme with customer money), I fail to see the distinction.  Why is one guy behind bars and the other guy still the President's best buddy and on the loose?

Impact of minimum wage policy from an economics perspective

Continue from previous post on "New Minimum Wage Policy", here we analyze the impact from an economics perspective. Many people said the new policy will jack-up the inflation figures due to higher production costs. Subsequently, it will dampen the GDP growth numbers. Is it true?

The impact on inflation and GDP growth is ambiguous. Setting a minimum wage would boost wages and consumption for workers who remain employed (likely to be the more productive workers, working in companies that have higher profit margin), but would hurt the profitability of businesses that are labor intensive and could potentially lead to higher unemployment rate.

The impact on growth will likely be a net negative in the short-run as it might result in raised cost without an increase in productivity. In the long-run, this policy may bring about a positive impact if it succeeds in encouraging workers to upgrade their skills or for companies to invest more capital to boost productivity.
From an economic s…

Why Not Just Make It Against the Law to Hire Anyone?

The Obama Administration seems bound and determined to eliminate job opportunities in the American economy.  The latest salvo in the war on jobs by the Obama folks is the new set of rules and regulations coming out of the EEOC (the mis-named "Equal Employment Opportunity Commission").  The new rules would force more and more mandates on companies who have the temerity to hire a handicapped worker.  The new rules force dramatically higher "reasonable accomodation" standards on firms that hire handicapped workers.

The Wall Street Journal highlights the new rules in their opinion piece today entitled (appropriately): "Disabling Common Sense."

So, what is the predicable effect of the new EEOC rules?  For certain, employers will be less willing to hire the handicapped.  For another, since the definition of the handicapped is ever-shifting and will in time encompass virtually every American, employers will be less willing to hire anyone.

The Obama plan for jobs se…

Minimum Wage Policy: Pain for SMEs?

Malaysia Prime Minister promised that there will be an important announcement on 1 May 2012 (Labor Day). Without much thought, it's very obvious that it was closely related to "Minimum Wage Policy" which already echoed by Government to win the heart of public. However, it receives much objections from private sectors, especially small-and-medium enterprises (SME) claiming that the new policy would impact on their balance sheets drastically. Really?

Impact of a minimum wage policy As pressure mounts on the government to ensure that private sector workers in Malaysia earn salaries above the poverty level of RM760, Malaysia could set the minimum wage at RM900 for Peninsular Malaysia and RM800 for East Malaysia. According to World Bank, Malaysia's wages have risen by a CAGR of 2.6% over the past 10 years, while inflation has risen at a higher pace of 3.0-3.5%.

Who is the BIG winner? The new policy would benefit some 3.2million workers or about 1/4 of Malaysia's workforce…

So Long Sarcozy

Nicolas Sarcozy, President of France, is in deep political trouble.  He should be.  Along with Angela Merkel of Germany, Sarcozy has orchestrated the absurd policies that have been pursued in the Eurozone over the past 36 months.  The answer to too much debt, if you believe Merkel and Sarcozy, is more and more debt.  Together with half-hearted pleas for budgeting austerity, the Merkel-Sarcozy is a "more of the same" plan that simply makes a bad situation potentially catastrophic.

Tim Geithner and Barrack Obama have openly advocated even more ridiculous policies for the Eurozone, patterned after their own US policies, that make the Merkel-Sarcozy absurdities look mild by comparison.

It is amazing how often the Merkel-Sarcozy formula is used in countries throughout the western, developed world.  All of these countries, without exception, have made promises to their citizenry that cannot be kept.  So, now, all of these countries have a combination of out of control sovereign deb…

Suing Bank of America

Bank of America has recently settled a lawsuit with two public pension funds for $ 160 million.  The case involved BofA's purchase of Merrill Lynch.   Who pays for this?

As in many things, no one seems to ever ask the question: who pays?  Instead, folks bask in the view that the bad guys got their due.  But, did the bad guys get their due in the BofA case?

BofA is a public company.  The biggest single owner of BofA are American workers of slightly above average income.  How do they own it?  In their pension funds.

The next largest owner is another set of average Americans -- folks who own mutual funds either in their IRA accounts or in the brokerage accounts.  These folks have saved this money, invested it, and have ended up as a major owner of BofA.

So, when you ask who pays, look in the mirror.  The two public pension funds who won $ 160 million in the case will be paid essentially by the owners of BofA, the single biggest group being other public pension funds.  So, to make it clea…

The Public Pension Saga

State and local governments in the United States have a major fiscal disaster on their hands.  The obligations of these governments embodied in their pension plans for government employees are not funded and there are no serious plans to fund them.  The result: a combination of looming state bankruptcies and drastically reduced pension benefits for covered employees.  The biggest single group of pensioners threatened by this looming disaster are public school teachers.

Yesterday, Democratic Governor Pat Quinn of Illinois made a last ditch desperate effort to avoid disaster in Illinois by urging state employees to "voluntarily" accept a shift in the retirement age to 67 and to contribute an additional three percent of salary to their pension funds.  This is not a reform, this is an emergency and Quinn is a Democrat elected with strong union support in a traditionally Democratic state.  Even if Quinn's suggestion is taken up by public employees, which it won't be, it is…

Slowdown Ahead?

Some regions and sectors of the US economy are moving right along.  In the aggregate, though, the economy may be slowing and slipping back into recession.  It is not just housing.

The current prosperity has limits.  Economic expansion depends upon aggressive entrepreneurial activity and, except in technology, we're not seeing much on the entrepreneurial front.  Why?

Some roadblocks to prosperity are "hard" obstacles and some are "soft" obstacles.  The "hard" obstacles are excessive government regulation, the government-imposed cost of labor, and sharply rising energy costs.  Most of these "hard" obstacles are self-imposed problems for the US economy.  We have put these restrictions on our economy and they are now a serious impediment to an economic recovery.

The "soft" obstacles are the almost daily attacks by the White House and its supporters on the business community.  These attacks have created a gloomy background that clouds and …

Why Is This a Conundrum?

A conundrum is something that is surprising and unusual and difficult to explain. Sometimes a conundrum is described as a "riddle." Today's conundrum, according to the media, is the "jobless recovery." Really?

Is it truly difficult to find the reasons why employers have scant interest in adding to their work force? The only folks that find that this is a "conundrum" are folks that are not employers. American employers know perfectly well why hiring new employees is of little interest and could pose a major threat to their company's financial security.

The future of the US is to use labor from outside the country. Why? Is it because wages are low? If that were the case the US would have always "imported" it's labor through outsourcing. Why is "outsourcing" a modern phenomenon? Is this really a conundrum, as the media is fond of asserting? Or, is it simply the logical and predictable outcome of the dramatically incre…

Why Jobs are Few and Far Between?

Americans are generous people. They believe in helping others. The Americans for Disability Act, passed by overwhelming bi-partisan Republican and Democratic support, championed both by then Senate Majority Leader Robert Dole and then President Bill Clinton, must have seemed like a good idea at the time. Why not help people with disabilities? Isn't that the right thing to do?

Most Americans would answer the above question in the affirmative. Why not?

But, the reality is the ADA, as the act is known, has a definition of disability that the vast majority of Americans would never agree with. For just one example, chronic alcoholism is a "disabililty" under the ADA. If an employer refuses to hire someone because they are obviously inebriated in the interview and they confess to a severe drinking problem during the job interview, then that employer can be prosecuted under the ADA. Is that what a bi-partisan group of Democrats and Republicans thought they were singing up…

The Cost of Higher Education

One of the predictable outcomes of the technology revolution is that the cost of providing education should gradually fall to zero. In time, the marginal cost of providing most aspects of education, especially "higher education," should be negligible.


First of all, the body of knowledge that is imparted in higher education grows only glacially. From year to year, you can think of it as almost constant. We also know a lot about how people learn and we know that people can learn from using computers, ebooks, and the like. These things are cheap and getting cheaper.

Does it help to have classrooms? Yes, but only marginally. Often computer programs and well crafted films can provide better instruction than the classroom. Businesses, like the Teaching Company, have exploited the idea that courses on CDs can teach as effectively, perhaps more effectively, than herding students into classrooms.

We know that the really great teachers spend less and less time in the classroom…

Should Government Abolish PTPTN Loans?

Once again, PTPTN (Malaysia National Higher Education Loan) came to the limelight lately with the wrong reasons. In conjunction with this, Finance Malaysia did a survey on Facebook Page asking our fans "Should Government Abolish PTPTN Loans?", and guess the answer given by majority of them? NO.

Emmm... What does this mean? It's pretty clear that majority of us thinks that PTPTN should be continue for the following reasons:
There is no FREE lunch in this worldBorrowers should repay what he borrowsThe scheme did already help many financially distressed students pursuing tertiary education
Thanks for your participation in the survey. Yet, many readers keep asking Finance Malaysia, our view on this matter. Before answering you, we also highlighted that this blog is of freedom of speech, we're not political driven blog, and we tend to be political-neutral in writing. Below is our view on this issue:

We agreed that there is no free lunch, especially in Malaysia. We should chan…

CIMB-Principle Strategic Income Bond Fund 2

What is CIMB-Principal Strategic Income Bond Fund 2?
Take advantage of the world’s interest in Asia with an investment that aims to provide regular income with potentially higher returns (as compared to Fixed Deposit)! Persistent low interest rates in US and Europe have driven demand for Asian bonds. In addition, credit conditions are improving and may lead to potential rating upgrades in the next few years (Fitch Ratings, ADB, Bloomberg, January 2012). This sustained demand means there will be strong support for Asian bond prices in the future.

The CIMB-Principal Strategic Income Bond Fund 2 portfolio will comprise both investment grade securities and high yield securities. The Fund may also invest into foreign bonds which are more aggressive in nature for potential higher returns. This enables you to benefit in Asia’s high growth prospects via a more stable asset class as compared to equities.
Investment Strategy
The Fund seeks to achieve its investment objective by investing between 70…

Why Government Should NOT Guarantee JCorp Debt Refinancing?

It's becoming confusing for many people, especially outsiders (non-Malaysian), as to the role of Government to Malaysian corporate. And, it had been more confusing when Government dishes out lots of Goodies to certain groups of people (as long as they are eligible voters) citing to help bring down the burden of Rakyat. Good reason though. However, many of us know that this may short-lived just because of the coming general election. Anyway, this is part of the political gimmick usually played around the world. Nothing's wrong.

One end, our Government targeted to bring down the deficit numbers by cutting subsidies like Petrol prices. But on the other end, it dishing our cash just like what announced during Budget 2012, citing Government had made encouraging improvements in collecting taxes. Then, why not bring down the budget deficit of the country first? Does few hundred ringgits really make huge different for people?
A BAD example set by JCorp? The latest movements by Government…

Politics Masquerading as Economics

The NY Times strikes again!

In today's times,MIT's Simon Johnson, has put his name on one of the most absurd articles about the modern economy that has yet to find its way into print. It's worth reading, if only for its absurdity.

Johnson has decided that America's banks are responsible for Medicare's funding problems. Medicare has a $ 66 trillion unfunded liability. The entire US GDP is slightly more than $ 15 trillion and the bank sector is a small fraction of that number. So, how did the mouse fell the elephant?

You would have to read the argument to believe it. Johnson teaches entrepreneurship at MIT, so I guess he can be forgiven. If you want to be treated to a good laugh, read Johnson's "perspective" in today's NY Times.

The NY Times must roam the world looking for folks that will say these kinds of things in print.

Walker versus McDonnell

Republicans often do the work of their opponents. Virginia's Bob McDonnell is a case in point. When McDonnell was sworn into office as Virginia's new governor in early 2010 his very first action was to undermine the state's public employee retirement system. The prior governor, Democrat Tim Kaine, had put in the 2010 budget, that McDonnell inherited, a provision that would begin the process of employees contributing to their own pension funds. All McDonnell had to do was accept this provision and a bi-partisan beginning to reforming public pension funding would have begun, at zero cost to taxpayers. But, no.

McDonnell could not wait to strike the employee contributions, amounting to a meagre one percent of compensation (an amount that would be increased to two percent in year two), from his budget. Loudly proclaiming his desire not to raise taxes, his actions guaranteed massively higher taxes on future generations of Virginia taxpayers.

In his second year, McDonnell …

Court Decision is Pivotal

Normally, the Supreme Court's activities are irrelevant to the future direction of the economy. But, not this time.

The American economy is weighted down by historically unsustainable debt levels. This is not just a problem of federal debt. If you add in state and local debt, the situation is significantly worse than the European sovereign debt crisis. And, there is no good solution.

On top of the sovereign debt overhang, the American economy is beset with an onslaught of new regulations that threaten to overwhelm the fledgling recovery. Businesses have pulled in their horns. There is no real enthusiasm to expand employment or start new businesses. Meanwhile, there is a steady drumbeat of vitriol from the White House about how "unfair" business people are. This stuff takes its toll.

With Obamacare on the horizon and a massive tax increase slated for early 2013, the American economy is poised to go over the cliff and another important recession could well be underway…

Personal Income Tax for YA2011

Many readers asking us why we did not update the Personal Income Tax Relief for year of assessment 2011, and below the table explain why. Nothing special, because the tax relief for YA2011 was the same as previous year (2010). So, FM would like to use back the same table posted last year here.

Last year, some of YOU commented that the table shown was very convenient for YOU to refer to based on the color used for different kind of tax relief. I think there is none other than FM who differentiate that way. This has shown that FM strives to innovate for the benefits of readers. Haha.
Blue color          : Tax relief that we can adjust easily in our daily life Green color    : Tax relief for property not rented out with S&P signed between 10/03/09-31/12/10 Yellow color       : Tax relief related to life insurance premium Light Red color : Tax relief related to child
By the way, FM would like to express our gratitude for 900 Facebook Page Fans, who continues supporting us along the way. Yea…

Irrelevant Economic Issues

Does it matter if a presidential candidate has a Swiss bank account? Will that impact economic growth for good or evil? Will raising tax rates on millionaires, which will mainly lower tax revenues (because income will simply be shifted or accrued), improve the economy or help the unemployed or reduce national debt? The answer to all of these questions is "no."

The real issues in the American economy are economic stagnation, exploding levels of state, local and federal debt, and the absence of public or private savings. These are the issues that matter. Assuming that a candidate has nothing to say about any of these issues, it only stands to reason that the candidate will begin to talk about other things like "tax fairness," "carbon footprints," "public investments," and so forth.

The interesting question is whether the public is interested in the real issues or the irrelevant issues. European countries have focused on irrelevant issues for t…

What would Keynes Say?

Mainstream economists continue to parrot the single equation naive "Keynesian" model of macroeconomics. This model says that increasing "G" will increase aggregate demand and lead to a higher GDP.

This "naive" model was developed by Richard Kahn, not Keynes, and was brought forward in a world where government spending was, by modern standards, relatively modest.

Today, in a world where government activity consumes nearly half of all resources in the US and close to two-thirds of the resources of the typical European economy, it is highly unlikely that more government spending would have any "Keynesian-like" effects. Why would giving public employees a ten percent pay raise improve the GDP? Keynes would turn over in his grave to see his work interpreted in this fashion.

Most economists don't read Keynes. What they read is the simplest mathematical versions of Keynes devised by other economists who also never read Keynes. But the name, "…

Robert Reich Has It Right

Robert Reich, for Secretary of Labor in the Clinton Administration, penned an article today "For the rich, the recession is over." He's right.

The various policies put in place during the Fall of 2008 -- TARP, Federal Reserve activity, followed by the Stimulus Package of early 2009 and regulatory burdens of Dodd-Frank have all combined to rescue rich people, but promise to thwart any serious economic recovery. On top all of these misguided policies the Congress passed the "Affordable Care Act" which virtually guarantees no future economic growth for the US.

Absent a real economic recovery, poor folks really don't have a chance. The combination of laws that forbid hiring poor people (minimum wage laws) and laws that make it illegal for banks to loan money to poor folks (Dodd-Frank) and laws that make it virtually impossible to break the union monopoly of many construction jobs (Davis-Bacon, etc.), the deck is stacked against the poor and the middle class.…

"The Living Wage Campaign"

The left always gets attracted to ideas that sound good regardless of their real impact. The "living wage campaign" is just such an idea. This is essentially a minimum wage rule that advocates claim would help people pull themselves up out of poverty. In fact, it does just the opposite. Not an uncommon outcome for moral sounding initiatives put forward by wealthy, entitled college students designed to help the disadvantaged.

Even if one buys into the general idea, you have to wonder why the students and the advocates of the "living wage" don't simply dig into their own pockets and give money to workers who they think have inadequate income. The idea of making a personal wealth sacrifice never appeals to advocates of these schemes, who are invariably drawn from among America's wealthiest families. No, their idea of charity is to have someone who doesn't agree with them foot the bill for their ideas. Charity begins across the street for such advocat…

The Eurozone Slips Back into Recession

No big surprise. Austerity and the absence of reform are not a good mix. Meanwhile, sovereign debt levels soar off into the stratosphere.

There will be a lot of finger-pointing and the blame-game in the future when the current European trajectory ends in disaster. All of this was easily avoidable.

Had Greece been permitted, just two short years ago, to do a default workout with its creditors, the Eurozone economy would probably be motoring along today. But, no.

The Geithner-Merkel-Sarcozy strategy, which is really just blindly putting one's head in the sand, has been adopted. The result: economic contraction and growing political chaos. As for reform, that is out the window, as recent developments in both Spain and Italy can attest.

Whenever economic conditions seem to be faltering, there is an outcry for politicians to "solve" the problem. Inevitably, politicians take a relatively minor problem and turn it into an economic disaster. This has happened over and ove…

RHBInvest: Now you can TRADE and FLY

Other than competitive brokerage fees, brokerage firms are battle it all out to gain market share by dishing out all kind of freebies. Those who did not make the move would definitely lose their market share to other competitors. Last year, we noticed that many brokerage firms were competing in fees charged. But, RHB investment bank has their own way - RHBInvest HOTTIE Rewards programme.

Let your investment take you on Vacation!!! Under the programme, every broking transaction done on RHB's online share trading platform (RHBInvest) will be rewarded with loyalty points. Every RM1 spent on brokerage fees will earn 1 HOTTIE point and every HOTTIE point can be converted to 500 BIG points from AirAsia's BIG Loyalty global reward programme.

The accumulated BIG points can be redeemed for AirAsia's seats and for shopping at 1,500 BIG's associated partners and online merchants worldwide.
"We expect an improvement in participation. Most brokers are competing with real estate in…

RHBRI: Market Outlook & Strategy 2Q2012

More Signs of Recovery The tail risk from the euro-debt crisis has subsided after ECB opens its liquidity floodgates. Elsewhere, more signs of economic stabilization and recovery have emerged, particularly in the US. As the global economic recovery gains momentum, external demand for Malaysia’s exports will likely improve as the year progresses.
Domestically, consumer spending remains resilient, which will be reinforced by the progress in the implementation of the Economic Transformation Programme to sustain growth. We envisage the country’s economy to grow at 4.5% in 2012, albeit at a more moderate pace than the +5.1% achieved in 2011. This will underpin corporate earnings growth, projected at +12.2% and +7.9% for 2012 and 2013, respectively (+8.7% and +7.0% ex-Tenaga).

But, anticipate a short-term market pullback?
Notwithstanding improvements in the global economy, we continue to expect a market pullback and consolidation in the 2Q. In our view, apart from rising market caution ahead of…

Economic Inequality

Derek Jeter has made hundreds of millions of dollars. The sanitation worker who picks up the garbage at Jeter's home makes a fraction of that amount. What accounts for that discrepancy?

People are willing to pay high prices to watch Jeter play baseball and companies are willing to pay Jeter large amounts of money to speak favorably about their products. Is that wrong?

Why is there a problem here? It is not as if Jeter is the king and his garbage man is his serf. If the garbage man had Jeter's baseball skills and vice versa, then their positions might be reversed. In fact, in future generations that may well happen. Such is life in a free market.

Inequality of income and wealth by itself is of no signficance. It really does not matter. Poverty is a different story, but in the example above there is dramatic inequality of income but no poverty. These are different things and should not be confused.

Jeter is not wealthy because he compelled someone to give him money. He is…