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Showing posts with label Financial. Show all posts

The Damn Cards...

...by shazzain | Labels: Financial, Just me

Today..I did something I am so very proud of! I cancelled my credit card again....huhu...okay why I say again is because, I obviously did cancel this same credit card before, but then I got a call from the Bank negociating with me to keep it and saying they will reimburse my RM50 I had to pay to maintain the card the previous year. So I thought, why not just keep it and take my money back...and right...I fell right into the trap of holding it back!

I didn't get my money back because I didn't use the card within that 3 months, but I started using the card recently, on top of the other credit cards that I have, anyway, I realized that I had to cancel it for good this time because its becoming my 3rd back up card and having a 2nd one is bad enough, I don't need to have a 3rd one! I am spending way too much...and I have got to stop it! *I'm gonna settle my credit card debts!!*

So I decided to stop swiping, pay it off and cancel it...and I did it today! yeay! one down! another *ehem2* to go...:D

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I can be 2pid too!

...by shazzain | Labels: Financial, Just me

I'm depressed! Juz got my pay & paid all outstanding bills & commitments..n left with too little cash..well..that's my punishment for spending too much since last year (and before)..my 'hutangs' from credit cards can never be over..it just snowballs from one month to the other...like this month..if I have no cash..I'll be using my credit card! Swipeeeeee jeee sesuka hati!! damn...I'm soo dependent on it!!

When will I be able to make money work for me..I am trying something now..it should work..but it's a burden for at least one year...yeah it's using ASB...but I gotta pay the loan installments for the first year before I can let the dividend & bonus self fund itself...it's not that I don't know how to save..but I juz enjoy spending it! ahaks!

My mum wants me to invest in a property..but haha if I can't manage with my current salary...how am I gonna sustain paying for a property (plus I'm juz too lazy to deal with tenants n problem associated to owning a property! it's a hassle I don't need!)...and now I need a car...after managing to avoid buying a car for all these working years...I think I need it soon...Hate all this extra commitments..I just wanna be free & easy and spend & travel as I like...without creating such a huge hole in the pocket!

warghh tensen...I hope there is a bonus this year n its good! ohh yeah shifted jobs last year..no bonus..maybe that's why I'm feeling the deficit! yeker? hmm...

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The fable of the monkeys

...by shazzain | Labels: Financial

Something to help us understand the current financial markets...enjoy!

The Star, Saturday May 23, 2009
The fable of the monkeys
THINK ASIAN By ANDREW SHENG

ONCE upon a time, there was a kingdom that was famous for its banana production. The bananas were so good and tasty that they were even used for money.

One day, a monkey came and made an offer to look after the bananas. The people said, “but we never let monkeys look after bananas!” But this monkey was different. He said, “I have got a physics degree Summa Cum Laude from Bantech, I got an MBA from Chicaton, I have worked for Simian and Simians, the best firm in the business and look, I wear an Armani suit.” People thought – “he is right, we should not be prejudiced.” So they allowed him to look after a small plantation.

This monkey was very able and clever and under his charge, the plantation prospered. He noticed that bananas ripened very fast and could rot easily, and there were good bananas and bad bananas. The best bananas were gold in colour and were very valuable. Some were hard and not easy to sell. This non-standardisation of bananas was a great loss to the plantation and there was no liquidity in the market.

So this clever monkey called Ah Yuen invented the first derivative, using one banana leaf (called one Ye) to represent a bunch of 10 bananas. And people thought, how clever. We don’t have to carry bananas – banana leaves are so light and so convenient. Anyway, whenever we need bananas, we just exchange Ye’s with Ah Yuen, who is always willing to buy and sell bananas in exchange. After this, Ah Yuen became the richest person in the country and established a banana bank called Yebank! Yebank’s slogan was “Ye’s we have bananas.”

Ah Yuen was so entrepreneurial that he expanded through mergers and acquisitions, first through an IPO and then issuing banana shares to acquire more plantations. Everyone was happy – because they were now trading Ye’s instead of bananas and they felt they were growing richer and richer.

One day, Ah Yuen had a brain wave. Instead of trading one leaf for 10 good bananas, why couldn’t he package the good and bad bananas into a super leaf called Banana Debt Obligation or BanDO. He persuaded a Banana Rating Agency to give AAA rating for these BanDOs and persuaded an insurance company called BIG (Banana Insurance Group) to insure these BDOs with a special leaf called BanDS or Banana Decay Swap. If the banana decays, you swap for another banana. For his success, he got a 20% bonus and also options to more future profits.

One day, the King sent his Grand Vizier to check on the market. Ah Yuen gave a dazzling powerpoint presentation on how the whole market was self-regulating. He showed how he had created a huge market on BanDOs with complete swap and futures markets based on what was formerly a primitive market of real bananas. The country was prospering and everyone seemed happy. The Grand Vizier did not want to show everyone that he did not understand what the BanDOs and BanDS were and as long as everyone looked happy, he did not ask any more questions. After all, they were all rated AAA. Moreover, his nephew worked with YeBank.

The market in BanDOs was so successful that some asset managers claimed that they would sell their mother-in-laws first before they sold BanDOs. One clever asset manager even created a PonBan scheme, whereby he guaranteed steady high returns because he could hedge everything in the BanDO market through options, hence the name Put On Bananas scheme. His sales principle was simple – if you have to ask questions on how the scheme works, you can’t afford it.

One day there was a banana blight and some people decided to cash in a few BanDOs. A few bold hedge fund managers even had the temerity to short the BanDO market, causing market nervousness. So, to stop the panic, the Banana Exchange Commission decided that short-selling should be temporarily banned in order to create orderly markets. People were advised not to listen to vicious market rumours. However, because the premium on BanDS had gone up, the Banana Rating Agency had no alternative except to downgrade BanDOs from AAA to BBB or junk status. Overnight the market collapsed and YeBank had a bank run causing it to be nationalised. The investigators found lots of leafs, but no bananas in the bank.

There was a royal commission to investigate the collapse. The first question to Ah Yuen was: what happened to the bananas? Well, he replied, “I ate a bit as I was entitled to my bonuses and options. I paid the lawyers, the distributors and the Banana Rating Agency quite a lot of bananas. I gave you all a banana split called BanDOs because you wanted more bananas. Everyone had a good time, so why blame me? Don’t forget that I am still entitled to my retention bonus under my employment contract.”

After days of hearings, the royal commission reached two basic conclusions: Never trust monkeys with bananas; and a monkey in an Armani suit is still a monkey!

Datuk Seri Panglima Andrew Sheng is adjunct professor at Universiti Malaya, Kuala Lumpur, and Tsinghua University, Beijing. He has served as adviser and chief economist to Bank Negara, deputy chief executive of the Hong Kong Monetary Authority and chairman of the Hong Kong Securities and Futures Commission

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Just thinking....

...by shazzain | Labels: Financial

As some may be aware, the OPR has been brought down by 75bps, which is now standing at 2.50% on 21st Jan 09 during the Monetary Policy Committee (MPC) & the reduction of SRR from 3.50% to 2%. Then the thought process began…someone asked me through email:

TN: Hi... can I know what is SRR?

SZ: Statutory Reserve Rate – the amount set aside by the bank with BNM each time they take in a deposit, its basically idle money as it doesn’t earn interest in the BNM account, so it’s a cost to the bank.

TN: Ok. So it is 2% of total deposits is it? Is it any kind of deposit?

SZ: Yes 2% of the net of the eligible liabilities & asset. There is a way to calculate the amount that is eligible to be deducted from the SRR, certain deposits & capital items are exempted, that’s the eligible liabilities, get the net figure & apply the 2% which will be placed at BNM account with no interest. Refer to the attachment, the items are stated in the appendix [if anyone wants to see it, just ask me]

TN: Thanks. So when the OPR drops, it will be better for banks who are borrowing rite? And when SRR drops, banks have more money to lend out rite? But FD rate will also drop rite?

Here’s where I started thinking…
SZ: Yes yes & yes, but im wondering, actual deposits will also drop then kan? People will find else where to put their money, and since the equity market is down, ppl might just turn to unit trusts n all…since they could expect more returns, rather than low interest FD's...what do u think…then how to raise $$?

TN: guess people will just start spending more instead of saving rite?

SZ: That’s what they are trying to get ppl to do, but is it good for the bank that ppl dun wanna put money in?

TN: True... so does that mean this will cause adverse effects to the banks?

Gee I have no idea how it affects the bank…the question is still left hangging...Maybe I should start monitoring the deposit accounts & check the trend...or just find some reading material…

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Interest Rate Cut!

...by shazzain | Labels: Financial

This was meant to be written yesterday when the news was released, am so glad that BNM at the MPC meeting decided to cut the interest rate by lowering the Overnight Policy Rate (OPR) by 25 basis points (0.25%). Now OPR is at 3.25%. I'm just waiting for the BLR to follow suit & my loan repayment can finish faster! (provided no more interest hikes)...

Current BLR 6.75%, expected to drop to 6.50%. As usual the banks will adjust any upward rate ASAP but lowering of rates will be a little delayed...by next month it should be reflected in our statements.

Why did they cut? read on here

Rumors of another OPR cut next quarter...

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another trading fraud disaster...!

...by shazzain | Labels: Financial, Fraud

here's another story of fraud..this guy, Jerome Kerviel is 31 & knows his way around..how could he have created such huge losses for a second largest bank in France - Euro 3.6bn? According to the newspapers, he had set up this postions secretly! He had gone above permitted limits, but how is that possible? don't they have monitoring systems in place?

Société Générale had its shares suspended on 24th Jan, said it had "uncovered a fraud, exceptional in its size and nature: one trader, responsible for plain vanilla futures hedging on European equity market indices, had taken massive fraudulent directional positions in 2007 and 2008 beyond his limited authority."

He was employed to take out insurance policies (plain vanilla futures hedging), but used the funds in to make big bets instead.

~My Life Paintings~

"Trying to look at life as an open book...I am the creator of the next chapters...the rest is history"

::Lepak Spot::

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The Damn Cards...

I can be 2pid too!

The fable of the monkeys

Just thinking....

Interest Rate Cut!

another trading fraud disaster...!