Staying High and Dry in a Recession: by Robert Kiyosaki

There's an old saying that goes, "It's a recession if your neighbor loses his job. It's a depression if you lose your job."

Watching the financial news networks and reading the financial publications these days, you'll see many people asking if the U.S. economy is heading into a recession. From my vantage point, the answer is yes. I believe that for many people in certain industries, like real estate, the worst is yet to come.

Economic Ripple Effects

Before getting into why I think there will be a recession, it's important to know the specific definition of the term. Very simply, a recession is a decline in a country's gross domestic product (GDP) for at least two quarters. That means that by Christmas we'll know if we're in a recession or not.

In some ways, the coming recession is a product of the physical phenomenon known as precession. Precession is the effect of bodies in motion upon other bodies in motion -- or, more simply, a ripple effect, like when you throw a stone into a still pond and the waves emanating from it overlap.

While there are many such processional "waves" in the coming recession, one is the lack of integrity in the U.S. monetary system. The United States has defaulted on its financial promises many times in recent history. In 1934, we defaulted on domestic gold redemption. That year, it became illegal for U.S. citizens to own gold. Instead, the government required Americans to turn in their gold, and they were paid $20 in paper money for every ounce of gold they surrendered.

Once the gold was collected, the government raised the price of gold to $35 an ounce. Talk about a lack of integrity. And in 1968, the U.S. defaulted on silver redemption, taking U.S. dollars backed by silver out of circulation. Finally, in 1971, the U.S. defaulted on international gold redemption.

International Impact

Another reason for the coming recession is the subprime mess. And while issues related to the subprime fiasco may seem domestic, they actually have severe international consequences. The subprime mess seems to be a problem associated with lower-income people who can't afford their homes, yet it's really the tip of a very large international iceberg, and it'll affect all of us. Here's why.

In the Sept. 12, 2007, issue of Business Week, Kerry Capell asked the question, "Could any country be more exposed to the credit crunch than the U.S.?" The answer: "You bet, and that place is Britain."

Unlike many of its European neighbors, Britain shares many of America's financial traits. In the last few years, access to cheap credit in Britain has fueled a decade of economic growth, with home prices tripling in 10 years -- an even faster rise than in the United States. With cheap borrowed money, the English consumer has caused the British economy to boom; consumers are responsible for two-thirds of the British economy.

Today, Britain is more dependent upon financial services than we are. So what will happen to the world if both England and the United States go into a recession? The precessional effect is bound to be dire -- especially for working people.

Too Much Money

As strange as it may seem to the average person, the problem is not a shortage of money -- it's too much money. The world is choking on too many U.S. dollars.

Normally, when a currency gets into trouble as the dollar is now, all the country has to do is raise the interest rates on their bonds and things are fine again. But because of the subprime meltdown, the Federal Reserve can't simply raise or lower interest rates.

In simplified terms, the Fed must keep rates low in order to save the domestic economy. This causes the international economy to dump the dollar by not buying our bonds, which is one reason why the price of gold keeps going up -- it's the true international money. And the rise in its price (and in the price of oil) signals the loss of the purchasing power of the dollar; the world simply doesn't want any more dollars. This is a ripple effect from 1971, when the dollar came off the gold standard.

Less for More

The tragedy of this excess of money is that most of the world's workers have to work harder to earn less. This is because the currencies of the world are becoming less and less valuable. Even if workers get pay raises, the boost won't be able to keep pace with declines in the purchasing power of money, increases in expenses such as oil, decreases in the value of homes, declines in the value of stocks, and increases in taxes.

Just look at what's happened in the last decade. Ten years ago, gold was about $275 an ounce. Today, it's over $700. That means that, compared to gold, your income would've had to go up by 250 percent just to keep up with the loss in purchasing power of the dollar. Or, compared to oil -- which was about $10 a barrel 10 years ago and today is over $80 a barrel -- your income would've had to go up by 800 percent.

Sure, there are many people whose incomes have gone up way beyond 800 percent in the last 10 years. The problem is that most people's incomes haven't kept pace, and they're technically in a state of personal recession with no way out.

Throw Yourself a Lifeline

As the global economy continues to gyrate, you'll hear more and more people calling for the Federal Reserve to either lower or raise interest rates. The problem is that the Fed has less and less power to do much.

If it tries to save the domestic economy, the international economy will pound us. If the Fed tries to save the dollar internationally by raising interest rates, it'll kill the domestic economy.

Instead of looking to the Fed to save you, then, I recommend you save yourself by investing in real international money. One way to do so is by purchasing silver. Gold is expensive, but silver is still a bargain even for the little guy. When the recession comes, the ripple effect on your financial future will be immeasurable.

Robert Kiyosaki
Posted on October, 2007

Beware the IDR Falling into Singapore's Hands

Former Malaysian prime minister Mahathir Mohamad was interviewed by Malaysia's fortnightly political tabloid Siasah on Aug 9. This is an extract from the interview published in the current issue of the tabloid.

SIASAH: The Iskandar Development Region (IDR) is a massive and expensive project that is said to be very beneficial especially to Johor in the long run. But various quarters - including you, Tengku Razaleigh, PAS members and international financial analysts based in Singapore - are sceptical about whether the project will run as smoothly as planned.

Tun Dr Mahathir: We can develop our territory anywhere we like. But the problem is Singapore's involvement in this project. Why must there be a special joint ministerial committee to decide on the development in Malaysia? Why must we depend so much on Singapore's participation to develop the IDR? As we know, Singapore is not a good neighbour, and even if it agrees to be involved in the IDR, Singaporeans will eventually buy houses or factories and reside here. Singapore reportedly has plans to increase its population to eight million to 10 million (sic), a large part of which will be imported from mainland China. As Singapore can only accommodate up to five million to six million, the rest of its population will probably be placed in the IDR. So if we're not careful, the IDR will eventually be filled with Singaporeans. Past experience has taught us that we lost Singapore because the Chinese population exceeded that of the Malays. And tomorrow, if the government allows Singapore Chinese to occupy the IDR (through business, employment and property purchase) to a larger extent than the Malays, the IDR would be dominated by Singapore Chinese because the Malays cannot afford to buy homes there. Malacca and Penang remain in Malaysia because the Chinese population can be offset by the large Malay population. But in Singapore, the Chinese make up more than 75 per cent of the population while the Malays make up a mere 15 per cent. The Chinese there are rich and control the economy. For this reason, we had to release Singapore because the Chinese were too numerous and controlled the island. And at that time, Lee Kuan Yew, who had initially agreed not to interfere in the political affairs of the peninsula, broke his promise by contesting in the 1964 general election in Bangsar, which led to the late Tunku (Abdul Rahman) becoming incensed and expelling Singapore. Today, we are trying to invite Singapore to enter Malaysia by participating actively in the IDR through various incentives and investment promotions. Eventually, the Johor Malays - who would initially refuse to sell their land - would be blinded by the highly lucrative offers for their properties and sell them to the Singapore Chinese for instant wealth. After that, where will the Malays reside? They will be driven away from the rapidly developing IDR. They won't be able to afford the costly property there and will be forced to live outside the IDR. The IDR will then be filled with Singapore Chinese and Malaysian Chinese who can afford it. What if their numbers exceed the Malay population? We will once again lose Malay territory to the Chinese, as had happened with Singapore previously. What about the Singapore Government's active involvement leading to the formation of the joint ministerial committee? Is this necessary? All this while, we had never sought anyone's assistance or advice to develop our country. We had developed Kuala Lumpur ourselves without anyone's aid. We never called on any foreign minister to advise us on how we should develop KL. We have the Economic Planning Unit (EPU) to plan and advise us on our development. The development of Putrajaya, Labuan, Langkawi and the whole country was the result of our hands and the expertise of our people. Why must we develop the IDR by seeking advice from Singapore ministers? They are just like us. We developed this whole country without the help of foreigners and without the advice of any foreign minister, including Singapore's. In fact, those Singapore ministers sitting on the ministerial committee can't even make decisions without the direction and consent of the island's most powerful man, Lee Kuan Yew.

-----------------------------------------

10 Golden Rules From Boon

#1: Risk awareness; always place a Stop before you enter.
#2: Only trade when you knew you can win.
#3: Live life; love your friends and family.
#4: It gives you good money when you do it right, but it contributes virtually nothing to society. Contribute to society.
#5: Treat people with respect. Be remembered for your kindness, integrity, love, and care for the others. Not your money!
#6: To live you need oxygen and water. To succeed you need passion and perseverance.
#7: Winners collect money lost by those who are driven by greed and stupidity. Be a winner.
#8: Profit is only yours when you take it.
#9: Pick out associates whose behavior is better than yours. Stay away from jerks.
#10: If you are a jerk when you are broke, you are still a jerk when you are rich.

Today Is Black Monday???

Brutal selloff on Wall Street

Dow down almost 367 points, its third worst day of the year, on fears about credit and housing sector, earnings, record-high oil prices, slide in dollar, what the Fed will do next.

By Alexandra Twin, CNNMoney.com senior writer
October 19 2007: 6:42 PM EDT


NEW YORK (CNNMoney.com) -- Stocks tumbled Friday as record-high oil prices, more problems in the bank sector and slower corporate earnings growth revived worries about an economic slowdown.

Russian Rocket Launches First Malaysian Into Space

BAIKONUR (Kazakhstan): At exactly 9.22pm (Malaysian time), the Soyuz -FG rocket launcher blasted off from the Baikonur Cosmodrome. Russian Soyuz TMA-11 space vehicle carrying Russian cosmonaut Yuri Malenchenko, U.S. astronaut Peggy Whitson and Malaysian astronaut Sheikh Muszaphar Shukor disappears into the evening sky as it travels to the International Space Station (ISS) from the Baikonur cosmodrome in Kazakhstan October 10, 2007. REUTERS/Denis Sinyakov



We have lift-off!
In less than nine minutes, Dr Sheikh Muszaphar Shukor created history by becoming the first Malaysian in space.




Dr Sheikh Muszaphar Shukor is first in line to bring the Jalur Gemilang shoulder patch into space.

Contra Just For Maintain & Improve Skill...

Harnlen-wa
Sama seperti dulu2. Lepas jual harga terus naik terbang... tak ada rezeki la tu... he he

27.10.07 - Buy: 0.15
03.10.07 - Sell: 0.16
Gain: 0.01


Masuk kaunter baru:
Symphny

03.10.07 - Buy: 0.15
Sell: on T3 @ T4 next week
11.23 am = 0.17

Emotions can be greatest trading enemy... not the market.

4 Oct 07, 11:33
richman:

Lesson must learn from silver.never sell winning stocks too early.I did my study on thos ctr when mother was below 40cts and knew it was good to hold.held on to 200 lots bought at 11.5-12cts wrts but sold all at 15.5cts even though knew was going up further bcos of rumours in co.well i still made my money but lost on the opportunity to make the big bucks due to impatience and fear.well just sharing my experience .hope this can be of help to you to bcom better traders.we learn from our mistakes and others all the time.


Oct 07, 10:31
Br-03: your emotions can be your greatest trading enemy. not the market... right?

Look at Market Fluctuations as Friend

“Look at market fluctuations as your friend rather than your enemy; profit from folly rather than participate in it.”

Warren Buffett

Bull vs Bear (1 Oct 2007)

Bulls continue to increase while bears continue to decrease. Today, I notice something crazy, the newly issued CWs are trading at a very high premium. HK market close, but the CWs rallied. Looks like people are scared of missing the boat. Anyway, for the Malaysian market, not many counters have rallied yet, so we are still at the beginning of a bull stage. It could pick up strength and it could still die off. The important point is risk control.

Posted by swifz

Analysts expect share prices to rise

Story By : Tee Lin Say
via www.biznewsdb.com


WITH the growing volume and increasing interest among foreign funds, coupled with the Kuala Lumpur Composite Index (CI) being a laggard in the last two weeks, analysts are expecting the CI to stage a more convincing run up this week.

Volume has been steadily increasing on the back of vibrant rotational plays particularly among the oil and gas and plantation companies. News flow, both externally and domestically have been fairly positive. With most funds being cash up and looking to take new positions, this ought to support prospects of financial markets seeing further upside.

Over the week, Bank Negara Malaysia relaxed certain foreign exchange administration rules to cut cost of doing business in Malaysia. Taking effect from October 1, the changes include abolition of the five registration requirements and granting greater flexibility for Islamic funds managed onshore.

Non-Malaysians will also have more flexibility in hedging their ringgit exposure under the easier rules.

TA Securities technical analyst Stephen Soo says that these measures will see more investors coming to Malaysia.

While Malaysia has been steadily liberalising its market, this latest move should allow relatively freer fund flows, hence pointing to the market going up.

Local funds should be coming into the market in a bigger way too. The Dow Jones is now trading near its record high. If it can confirm a breakout in the coming week, I think we will see bigger buying orders across the globe,¡¨ he says.

He adds that domestically, buying momentum has been quite resilient.

I am more comfortable with the market now compared to two weeks ago. If you notice, the volume shrunk with the decline in the market, but correspondingly increased when the market went up. This indicates less selling pressure and is a positive sign in a bull market,¨ he says.

In the US, a report released Thursday showed new home sales fell 8.3% in August to a 795,000-unit annual rate. The median home price fell to US$225,700 from US$246,200, a 7.5% drop from a year ago.

US economic growth was slower than previously thought in the second quarter. The government revised US GDP growth from 4% to 3.8%, a move that was widely expected.

Despite statistics pointing towards a slowdown in the world's biggest economy, the Dow continues to scale upwards as investors expect the Fed to change into a more accommodative monetary policy.

The anticipation of more rate cuts can be clearly seen from the building up of buying interest.

Soo is expecting a belated market run up for the CI this week. He has pegged his resistant levels as the 1,350, 1,370 and 1,392 point respectively. The market will find support at the 1,320 and 1,302 levels.

On the corporate front, Putrajaya Perdana Bhd is bidding for some RM2bil worth of contracts to add to its current RM1.3bil outstanding contracts in hand.

Century Logistics Holdings Bhd plans to venture into the oil support services business by investing up to RM40mil to buy two vessels next year. The ships could be tug boats to transport oil rigs or they could also be used for oil rig crew accommodation.

For the six months to July 31, TA Enterprise Bhd posted an 87% increase in its net profit to RM114.4mil while revenue was also higher at RM272.3mil.

www.biznewsdb.com

Jual semula Patimas pada 0.11 dan Masuk Harnlen-Wa pada 0.15.

Info Patimas tak meyakinkan. Jual semula Patimas dan masuk Harnlen-wa sbb harga dijangka sampai 0.20 petang ini. Memang tak serik-serik.... Time will tell.

Antara Harnlen Wa dan Patimas. Masuk Patimas pada harga 0.11 sen dan Smrtech masih hold.

Ada sumber kata Harnlen dan Patimas akan goreng sdbelum hari raya. Beli melalui RHB Securitis dan tidak TA Securities. Sbb remisier kat TA tu kata Patimas tu lambat lagi nak goreng... ha ha. Memang tak serik lagi ni - tak nak dengar nasihat. Tapi tak pe, jika tak naik dalam 3 hari terus jual. Tak mahu jadi macam Silver, sumber suruh masuk tapi tak nak masuk... sekarang dah terbang tak boleh masuk nanti hangus... melepas la lagi.

Lessons from the Dutch tulipmania: Ooi Kok Hwa

PRESONAL INVESTING
OOI KOK HWA

Retailers suffered huge losses during the Dutch tulipmania from 1634 to 1637. We need to be extra careful in view of the excessive speculation in the China and Hong Kong markets as well as the subprime problems in the US housing market.

Q: What can we learn from the past market speculative manias, like tulipmania?

A: Lately, the Shanghai Index and Hang Seng Index touched new highs again. Besides, the Dow Jones Industrial Average was just about 2% shy of its recent peak of 14,000 points. Some analysts and fund managers have started to wonder when this excessive speculation would end, especially for the China market.

In this article, we will look into one of the past speculative manias, the Dutch tulipmania, which happened in the Netherlands from 1634 to 1637.

The tulip originated in Turkey but diffused into western Europe in the middle of the 16th century. The bulb can propagate either through seeds or buds that form on the mother bulb.

Due to slow propagation and popular demand, the tulip was viewed as an expensive, beautiful and rare flower. Hence, as the tulip was grown from bulb, the main object of this mania was the tulip bulb, not its flowers.

The market for bulbs was originally limited to professional growers. However, as a result of the inflow of large amounts of foreign funds and a rising demand for bulbs in France, the speculative buying interest started by end-1634. Many retailers liquidated their assets just to participate in tulip speculation.

Towards mid-1635, prices rose rapidly and people could buy it on credit. Many big merchants showed little interest while many lower middle and working classes were speculating in tulips.

At the latter stage of speculation just before the market crash, bulb prices surged 26 times within a month in January 1637. However, as the late buyers were unable to resell them at higher prices, they were forced to cut losses.

As a result of panic selling, the price tumbled to just 5% of its peak value in the first week of February 1637. Many middle-class people suffered huge losses.

Even though tulipmania happened more than 300 years ago, the recent speculative mania in the China and Hong Kong markets worry us.

According to Guillermo Calvo in his research titled, “Tulipmania”, he defined tulipmania as: “Situations in which some prices behave in a way that appears not to be fully explainable by economic fundamentals.”

Given that the China market jumped from the low of about 1,000 points to the present 5,400-level within a two-year period, it is hard to believe that its economic fundamentals can sustain such high market valuations.

Even though we are quite bullish on its long-term prospects, we are also concerned about the sudden surge in market value within such a short period of time.



Q: Given that the US Federal Reserve has lowered its Fed rate, can we say that we have seen the worst of the subprime woes?

A: Although the sub-prime issue has been outstanding for more than a year, it appears to be getting bigger rather than smaller. Nobody knows how serious the problem will be.

We like to use the Cockroach theory to explain the current phenomenon. Based on this theory, when you discover one cockroach in your cabinet, most likely there are more cockroaches there. This theory explains that one piece of bad news is an indication that there is more bad news to come.

Our view is as long as the US property prices continue to dip, we need to be extra careful as they can spread to other types of mortgages.