The sign of the present recession in the world was already there some 30 years ago. The leaders of the developed nations have refused to acknowledge it, fearing of losing grip of their own political powers. Up to last year, these leaders were still saying: “It is okay and don’t worry”.
The one main agenda these leaders have is “CHEAT”. There were a lot of cover-up like in the case of Enron. The blame was directed to the Auditing and Accounting firm. Nothing was done to the ‘Cheating game’. The whole system of the financial world has a major flaw i.e. the avenue for fraud and cheating is so inviting; this can happen without being found out until the firm finally collapse. There are so much derivatives in the financial system that no one, literally no one, is possible to detect the ‘fraud’ or ‘cheat’. This precisely is what happened to the present big corporations, even the Auditors can’t detect any suspicious account. Depending too much on the book figure, where there is no trace of the real value at all, is dangerous. This can be arrested if there is a ceiling or limit or control to the ‘paper or book value’.
For example, up till a few years ago, the Bursa Malaysia (KLSE) has no regulation on the demand of the presentation of the actual share scripts in all transactions within a working day. People then can make quick money without possessing any share transcript. At the same time, many people have also got themselves badly burnt. Now the new regulations require the presentation of the actual share script for transaction. In this case the game now is being played at a fairer and healthier manner.
Look at the present situation and this is all due to the poor financial system adopted by the world. We are also in the system, thus we too will receive the backlash by the consequences. Let’s look what happened to the European nations, as reported by the Straits Times.
World recession deepens
Credit crisis worsens ahead of Washington G20 summit PARIS - THE blast of recession hit Europe on Friday as leaders from more than 20 rich and emerging countries headed for a crisis summit in Washington. The EU announced that the 15 countries in the eurozone was in recession for the first time ever, with a 0.2 per cent contraction in the second and third quarters.
| Eurozone sinks into recession: official data BRUSSELS - THE economy of the 15 nations sharing the euro has slumped into recession for the first time ever, EU data released on Friday revealed, with GDP falling 0.2 per cent in the second and third quarters. Italy in recession MILAN - ITALY fell into recession in the third quarter, with the economy contracting 0.5 per cent from the second quarter when it shrank 0.3 per cent, official figures showed on Friday. France avoids recession PARIS - FRANCE narrowly avoided slipping into recession in the third quarter of 2008 with growth of 0.14 per cent compared to the second quarter, Economy and Finance Minister Christine Lagarde said on Friday. IMF sees significant Philippines growth slowdown in 2009 MANILA - PHILIPPINE economic growth is expected to drop further to about 3.5 per cent next year from a significantly lower 4.4 per cent expansion forecast for this year amid the global financial crisis, the International Monetary Fund said on Friday. |
With even Asian trading tiger Hong Kong reporting a shrinking economy and European car-makers reporting a 14.5-per cent sales slump in Oct, pressure grew on world leaders ahead of their summit to discuss how to stop the financial crisis becoming a prolonged recession.
French President Nicolas Sarkozy, European Commission head Manuel Barroso met Russian President Dmitry Medvedev in Nice, France, to work on proposals for the summit.
Japan said it would lend up to US$100 billion (S$151.75 billion) to the International Monetary Fund to help it shore up emerging countries.
Japan will also press for IMF reforms including giving greater influence to China, and said it would support the dollar as the main global currency despite the weight of US debt.
Global stocks rallied despite the new bad news. After a 6.67-per cent leap on Wall Street overnight, shares in London opened with surge of 3.9 per cent and the Tokyo market closed with a gain of 2.72 per cent.
But there was increased pressure on the world leaders arriving for the Washington summit, which starts with a dinner Friday night to start discussions on drawing up new rules for the global economy.
Tensions also appeared with the European Commission warning that it could take action at the World Trade Organisation if a rescue package for US auto majors appeared illegal.
The outgoing US president George W. Bush declared that ‘the crisis was not a failure of the free market system’ and that ‘our aim should not be more government. It should be smarter government.’
Mr Bush argued that it would be ‘a terrible mistake to allow a few months of crisis to undermine 60 years of success’ in response to calls from many quarters, including France, for extended rules and regulations for economies and boardrooms.
‘Many European countries had much more extensive regulations and still experienced problems almost identical to our own,’ Mr Bush said. ‘We must recognise that government intervention is not a cure-all.’
Mr Sarkozy, currently president of the European Union, said on Thursday, ‘I leave for Washington tomorrow to explain that the dollar, which at the end of World War II was the only world currency, can no longer claim to be the sole world currency.’
‘The world changes. We are in the 21st century and the French view is that we cannot continue into the 21st century with a system (established) in the 20th century,’ he said.
The Organisation for Economic Cooperation and Development said on Thursday that its 30 rich member economies were in protracted recession, and said the US economy would contract by 2.8 per cent in the fourth quarter.
In this rapidly worsening climate, French Economy Minister Christine Lagarde said it was ‘astonishing’ that France had escaped recession in the third quarter, as shown by official data putting growth at 0.1 per cent after contraction of 0.3 per cent in the second quarter.
The oil price in Singapore fell by 40 cents to US$57.24 in a market marked by the possibility of an emergency OPEC meeting on Nov 29 to discuss a further output cut, but also by an IEA report that demand is falling rapidly. — AFP
Will this world return to the barter trade system? Since we can’t trust paper or book value, there is no point carrying on working with ‘paper’ money. People will want real substance and goods. The present system can actually work well if everyone plays a fair and honest game. The real problem here lies on the fact that some so-called experts went off in a tangent and did not stick to the rules. That is why we need a revamp of the Economic and Financial System of the world, as suggested by the French President.
Since humanly, we can’t trust everyone then another new system or a renewed system must come forth soon. We can’t allow our financial system having any ‘black hole’. The unplugged ‘black holes’ are the hideouts of the big time financial ‘Robinhood’. All these holes must be plugged and cemented fast. Therefore, we need to revisit the new combination of the Social-Capitalism System.
Is there another better system? Becareful! The Scripture mentions another system in the last days i.e. the Anti-Christ system of buying and selling with identification of 666 on the right hand and the forehead. Think about this!!!!
(November 14th, 2008 posted in another blog)
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