Remember 1000 Ringgit notes.......BNM stopped them after they fixed the ringgit in September 1998
Do you know how big 1 Million ringgit is in 1000's.........it can be in your front pocket.......and you can sit comfortably...people were literally carrying them in bags over to Singapore before this measure was introduced....we were given till July 99 to change them...but by then they have exited ringgit..........they went for dollars
Singapore offered the highest return on Ringgit to finance speculative activities against our beloved currency in the 3rd Largest Foreign Exchange Market in the World......a lot of money was there....20 somethings with trading limits in Billions..and paid in relation to how much money they make...they were driving Ferraris in Singapore...imagine how much money you need to have to own one......moral hazards sets in when it was so easy to leverage against a Central Bank with less than 20 Billion USD reserves, the combined daily positions of speculators dwarfs the amount available by the Central Banks for daily smoothing or intervention activities.....
Now back to physicals........How well did we monitor private planes then?
Imagine shitloads folks......pocketsize 1 Millions..
Most left to Singapore.....and whose money are these I ask you ......the Malays,
The Indians or The Chinese?
Some Malay money left as well.....but not as much i think....they left further towards Afrika and Europe......slush funds.....
This money started coming back...... after Badawi took over .......they were hedging their bets after the Anwar episode.....they were not sure on who to finance....n mahathir was leaving.....
The sheer size of the money freaked Badawi i think.....kalau gua pun tergoda no kidding...i don't know what he did but after that..... everybody turned a blind eye to corruption as the LEADER of The NATION is perceived as being a corrupt person...you must lead by example no BUTs..........
People think it's Singapore money coming in, mislead n start shouting here and there...yes Singapore domestic money did come but together with our local Chinese money parked in Singapore and other international investors.....
Anyway folks lets get back to where the money is coming from.......
Singapore currently sits on more than 1 Trillion USD possible funds, this is from my last conversation with a Senior International banker..no data so far on this as the positions could be in other markets globally....and may be liquidated within hours, but most have trading lines to allow them to leverage on their positions, which is normally pledged as collateral
Where is the money now?....
Which entity would be tasked to hold it inside our system?
If it is................................
i heard once from the cook of my favorite chinese seafood.....his mate a couple of stalls away got busted with 3 Million cash.......and that was in 2001.....Same thing another mate told me...."dato dato tu layan lebih aje duit habuk pun tarak....apek tua pakai singlet dengan buku 555 pun duit berjuta"..........his wife works in wealth management....
High liquidity in cash and control over distribution channels allows them to have a firm grip in controlling parts of the economic system.....
Are these family money......generation after generations....preserved and growing
An indicator should be the level of Cash Liquidity of Chinese Politically Connected Companies, watch out for asset acquisitions when they enter.....heard someone lost 73Million Deposit.....lots of money you have...... to lose that amount?
I actually find the Chinese a very dedicated lot......more organized.....thats how they first came here.....perhaps they were working together before and was asked to go for a relocation into a foreign territory.......expatriates.....a lot were skilled workers with more complex tools than the locals.......
Why didn't the British adopt a training program concept.....bring in experts to train the malays in the skills of the foreign workers from china and India.....and increase the local malay skill pool further....after a few years send them back.......
Was it a skill that we could not learn?........................... I don't think so
The money now...... I think is not with the Political Parties.........the families are holding back..they are saying get your act together again if you want our funding......
MCA kelam kabut big time.........
DAP takde duit sangat.....sampai nak cari duit pun kena saman orang (I like the flying economy thing..keep it up...wish more would follow).......
And one more thing..........they can do "it" openly during Chinese New Year....not bad eh...
jangan main politik wang lah :-)
ReplyDelete(( Renungkan )) Ke Mana Kita Mahu Pergi?
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Err Faizal ...i'm lost again but thanks
ReplyDeletehonestly i do not much about this, so not much comment could be done.
ReplyDeletebut, i think could be komisen money stranded there...especially a politician.
Legend has it that there are loads of RM1,000 notes in Indonesia not worth the numerical printed on them.
ReplyDeleteStuck in Limbo now. :)
Whose? Your guess is as good as everyone else's.
salam Faudzi
ReplyDeletemay not be "stranded" but "left by choice"......
Raison d'etre
I heard container loads.... :), the ruppiah suffered the same fate, Singapore is known to be the Center of Corrupt Money in ASEAN....some came back to Jakarta but under the guise of Foreign Direct Investment or Foreign Portfolio Flow in Equity markets (making up almost 60% of total ownership in Indonesian Listed Co)
the great mr SatD,
ReplyDeleteSo Soros, is out of the picture? its now greedy 20 somethings from the land down under.
Now what your implying is that the crisis of 97 was down to the money traders in Singapore. Thats totally missing the point - yes the traders were there but what they took advantage of was the stupidity of our local idiots who borrowed in USD to fund their mega expansion projects - the reason being was that funding in USD had a lower borrowing cost than funding in ringgit. We got tricked by the Mat Salleh and till today we will continue to get tricked by them because Malaysians are probably not very smart - they believe in ketuanan orang putih.
The second point u do not mention is why only Malaysia and Indonesia kena hammer. Korea got whacked too, so did Thailand. For me the reason was that the ringgit was overvalued vis a vis the USD dollar. It was trading at 2.x to the USD and our inflation rate was actually much higher than that ( of course it will never be mentioned becos over here most basic commodities have price control).
Good point you mentioned why the Mat salleh did not introduce training program. What about the billions of IPT, IKBN and Universities ha? The problem is down to the easy money and corruption - the world has progressed, and we are still stuck behind. Nowadayas, what is our competitive advantage?
As to what the Chinese did. Well, if we continue to call them bangsa asing, squatter, pendatang what will you do? Move your money elsewhere ma,
My advise, grow up please.
And why not figure out who cashed out when Maybank bought BII?
You guessed it right - HINDRAF
Mr Padedoh
ReplyDeleteGuano demo kato ambo kecek pasa currency crisis weh….sapo hok missing the whole point of the article ni….ginila….ambo cerito sekali lagi deh…guano nok kok kelate ko kok ore putih…..
First of all I’m not GREAT..i’m just a monkey from Uranus awaiting my turbo booster spare-parts before leaving this dying planet…
As for my mention of Singapore in the article is merely to show that its is where Chinese Money congregate whether Good hard earned or corrupt money... they all end up in Singapore
As for the currency crisis, Currency trading is predominantly speculative with only 5% of daily turnover of 3 trillion being “international trade’ based..the rest are just bankers, hedge fund,etc…Singapore is the 3rd largest forex (FX) market in the world….
FX positions are typically reported by the local traders (Commercial Banks) to the respective central banks and in Malaysia in particular we have the Form P and Form R for all trades exceeding 50,000 MYR equivalent…..so simple disclosure of why one need to buy or sell USD against MYR……in this counter parties to the trades will provide basic info ……hedge funds typically trades on leverage with trading lines provided by the counterparty banks hence the names that would appear in our (BNM) disclosure would never ever be hedgefunds.So to point the finger against hedge funds n namely Soros would be just a wild guess without any credible facts
From Feb 97 up till June 97 our Ringgit was actually appreciating with a target to go around 2.45 to a dollar….the yen was also appreciating from 145 to 110 yen against USD….this was the trigger point, the Thais are known to have a Huge exposure to cheap Yen borrowing and all of sudden their obligation to the yen loans increased significantly…….
everybody took the bet, including all our local banks, but we were small players as BNM put an Open Position Limit (How much open exposure one can take against another currency) of up to MYR 50 Million per insititutions….
regionally everybody was on the same bandwagon…It was such a simple bet ..just BUY… nothing to think about anymore( or if the hedge funds buys ..double that just ride the trend), the fundamentals does not support the trend anymore…….So everybody went from one currency to another testing historical resistance on a daily basis from July 97…lets see at what level the Central bankers start to throw their hard earned reserves….anyway all of us knew exactly how much bullets(reserve) they have to start with….BNM went in around 2.5250 for 3 days which was a psychological barrier to the market then….i think we lost around 3 to 4 billion defending that level……direct impact immediately was a squeeze in the Interbank Money Market (MYR Based) sending Overnight Interest rate to 50% from 5%…….
Inter-bank money market is the lifeblood of the financial system once participants loses confidence and stop lending the whole system can breakdown in a few weeks….Foreign banks (I’d rather not name them) cut all credit lines to the Local Banks this systematically compounded the liquidity effect and created a 3 tier lending system (Good Local Bank Vs Foreign banks, Foreign Vs Foreign, Local Vs Local)..the Central Banks stepped in daily for months to correct the imbalances, a number of local banks were technically insolvent borrowing from the lender of last resort on a daily basis to meet its obligations….
if i can divert a bit to a case in Hong Kong years before 97, HSBC was facing a run.. all retail depositors were literally taking money out from its branches n putting them into Standard Chartered next door….guess what the folks in SCB did …they pass the money back thru the backdoor to HSBC to ensure that they have enough money to maintain confidence…..that spirit clearly did not exist in 1997 in KL ….all foreign institutions technically stop having any further exposure to local counterparts…..and the local retail depositors (typical herd mentality) began withdrawing the money from local banks n started queuing in foreign banks…they literally had to take a number to deposit money……
Now back to the FX market, our daily turnover then was around 250- 300 Million USD prior to the attack(This is so small compared to the size of financial institutions who were betting against us) …..throughout July 97 to Sept 98 volumes dwindled…markets was so thin….daily bid n offer spreads widen significantly it wasn't to hard to move the market by 1000 basis point…if u wanted to…A number of agents of intervention were roped in namely Petronas, MLNG, Maybank, Bank Bumi….some were selling dollars daily ..n some were lending on behalf on BNM into the market……
Starting from April 98 the policy makers began studying how the market operates from a total view perspective….look at where the leakages are….and put a plug to it….as u all know by now the key measures were - Fix Ringgit, Stop all Offshore Trading of MYR, Stop CLOB…….but the high interest rate n liquidity shortage was too much to handle for our local corporate who borrowed purely with real estate collateral to finance more real estate development…..n some were sneaky enough to slip past proper credit check to provide “inflated speculative shares” as collateral……..hence the creation of Danaharta to relieve the banks of the NPL’s (and this was after BNM reclassified NPL from 6 months to 3 months)…Danamodal to pump in more capital into banks………
Overall i think we did really well with some help from Foreign Consultants/Advisors, carefully crafting tactical countermeasures to restore confidence n provide stability to the market…..at what cost i may ask…..
After the counter measures were in…. BNM systematically flooded the market with more ringgit by reducing the Statutory Reserve requirement from 12.4% to 4% this money used to be placed in BNM earning 0% is now out into the system… local currency interest rate plummeted and BNM technically had to borrow back the money to ensure a positive real interest rate environment…this was the environment of cheap money which we have been experiencing since 98…n the boom in the bond markets…
One thing we all must remember and also monitor is that the actions taken to prevent a crisis should not raise the odds of creating more problems in the future……… In particular, the problem of moral hazard is a significant concern. If market participants begin to rely too much on regulators and central bankers to manage possible future crises, they may act in a way that has the effect of raising the risk of a financial crisis. For example, they may fail to engage in adequate due diligence when extending credit to other market participants or to maintain adequate capital for the risks they undertake….. And they might come to believe that the government possesses more tools and resources than are actually available to shield them from the consequences of poor risk management……as we all sit and watch CNN or CNBC we are seeing all of this happening today in America….bailouts in the hundreds of billions…..
Anyway back to your comment, just to set the trajectory back to the original intention of the article; Chinese Money are mostly hard earned money(or corrupt) who will leave and don’t give a shit about the country that they reside whether they are pendatangs or home breed.
The whole article is about the analysis of the potential flow, its distribution agents and how the Chinese Taukey paid their bribes to 12 year old Malay Kids During Chinese New Year with MYR 10,000 Ang Pows
Why don’t you grow a couple of inches and then come back to discuss BII with me