When Kevin Rudd announced on Oct 12th that the government will guarantee all bank deposits, it was reported that:
(Quote from Herald Sun)
Opposition Leader Malcolm Turnbull welcomed the Government guarantee on bank deposits and promised to help ensure the passage of any necessary legislation through the parliament.
"It's a very important step and we will undertake to give the Government every assistance in ensuring that the necessary legislation will pass through the parliament promptly," he said.
Despite his call for bipartisanship, Mr Turnbull claimed credit for the Government's strategy.
(Unquote)
Now Malcolm is castigating the government for the disquiet in the mortgage fund industry where investors are transferring their money out and putting them in the banks to take advantage of the government guarantee. Why didn't he speak up on Oct 12th, instead of nipping at the heels of Kevin Rudd on hindsight? Secondly, even if the government had fine tuned the bank guarantee further at that time, it does not mean that other undesired (or perhaps necessary) side effects would not have occurred. Thirdly, banks are regulated by the government and therefore the government should uphold its responsibility to the people. As far as I know, mortgage funds may not be subject to the same regulations and they probably bear high-gain, high-risk return on investment. Kevin Rudd has the wisdom not to turn this into a public debate with Malcolm Turnbull. Doing so would only erode the public's confidence in the economy and hence hamper its recovery.
Perhaps, capital flight from mortgage funds to banks would have happened even if Kevin Rudd had not announced the bank guarantee. After all, many mortgage funds have fallen in recent times. Banks, while also shaken by the financial crisis, are still seen as the better bet of the two.
Thursday, October 23, 2008
Monday, October 20, 2008
Nikon D90 and multimedia photography
The newly introduced Nikon D90 sets a milestone in digital photography for the serious photographer by being the first DSLR to have high definition video mode, along with Live View. These two features have been established in all digicams, but this is the first for a DSLR, and a trailblazer for all the other manufacturers. Many serious photographers play down the usefulness of video mode in a high end camera. Perhaps they fail to accept the birth of "multimedia photography". While the introduction of multimedia has been quietly taking place in digicams, the D90 has formally introduced true professionalism to the game.
Commercial grade video requires professional equipment; certainly not the kind you get with a consumer-level video camera. While photography is relatively inexpensive, videography is both expensive and time consuming. In between these two, "multimedia photography" incorporates both conventional photography and videography techniques to produce a new art form that can be embraced by a digital photographer who is keen to expand the boundaries of photography.
The D90 makes it possible to create extremely high quality video clips alongside high quality images without spending a bomb on professional video equipment. Using inexpensive slideshow software (vis-a-vis video editing software), it is possible to create short artshows complete with audio, still images, and video. Examples of such artshows can be viewed at http://www.photodex.com/sharing/spotlight. Welcome to multimedia photography!!
Commercial grade video requires professional equipment; certainly not the kind you get with a consumer-level video camera. While photography is relatively inexpensive, videography is both expensive and time consuming. In between these two, "multimedia photography" incorporates both conventional photography and videography techniques to produce a new art form that can be embraced by a digital photographer who is keen to expand the boundaries of photography.
The D90 makes it possible to create extremely high quality video clips alongside high quality images without spending a bomb on professional video equipment. Using inexpensive slideshow software (vis-a-vis video editing software), it is possible to create short artshows complete with audio, still images, and video. Examples of such artshows can be viewed at http://www.photodex.com/sharing/spotlight. Welcome to multimedia photography!!
Sunday, October 19, 2008
Changing the ethos of a nation
Ethos, by one definition, is the distinguishing character, sentiment, moral nature, or guiding beliefs of a person, group, or institution. With this in mind, think how immigration patterns can change the ethos of a country like the US, Europe, and Australia. Australia, in particular, has both a constant outflow of citizens, and a inflow of new migrants. This doubles the rate of change of the ethos in the country.
Without proper control of the mix of outflowing "ethos" (for want of a better word) and inflowing ethos, Australia will gradually experience a change which may or may not be welcome by the older inhabitants. This can create social unrest, which will in turn erode the economic advantages that the immigration policy is trying to create; i.e. skilled workers, job creation, increased tax revenue. Social unrest tends to become more pronounced in times of economic crisis.
Negative ethos that might build up over time includes extremist religious beliefs, which can be very incendiary; or simply cultural behaviors that are more easy to live with in this age of globalization. I propose that immigration policies should also take care of the changing ethos in the country and not just be focused on economics.
Without proper control of the mix of outflowing "ethos" (for want of a better word) and inflowing ethos, Australia will gradually experience a change which may or may not be welcome by the older inhabitants. This can create social unrest, which will in turn erode the economic advantages that the immigration policy is trying to create; i.e. skilled workers, job creation, increased tax revenue. Social unrest tends to become more pronounced in times of economic crisis.
Negative ethos that might build up over time includes extremist religious beliefs, which can be very incendiary; or simply cultural behaviors that are more easy to live with in this age of globalization. I propose that immigration policies should also take care of the changing ethos in the country and not just be focused on economics.
Thursday, October 16, 2008
Mr. Me-Too, he isn't
When Kevin Rudd was running against John Howard in the election, John Howard tried to shake Kevin off by accusing him of "Me-Too-ism". During this financial crisis, Kevin Rudd has shown convincingly that he is no copy-cat. In fact he has initiated more swift and decisive actions than any other leaders in tackling the crisis. First was the $10.4bil economic stimulus package which was heartily embraced even by the opposition party. Today he announced that billions of dollars in superannuation funds would be used for nation building. This is the classical fiscal weapon used to reverse a slowing economy. Thirdly, Kevin announced that he will be meeting business leaders to get a feedback on what else could be done to stimulate the economy.
Take note that Kevin Rudd did not start by asking everybody what he must do. That would be the sign of a leader who acts by getting input first - not necessary a bad thing to do - but inappropriate at this time. Kevin demonstrated decisively and swiftly, as what is needed in this crisis, yet without a hint of self interest and party protection.
Take note that Kevin Rudd did not start by asking everybody what he must do. That would be the sign of a leader who acts by getting input first - not necessary a bad thing to do - but inappropriate at this time. Kevin demonstrated decisively and swiftly, as what is needed in this crisis, yet without a hint of self interest and party protection.
Friday, October 10, 2008
How genuine is Henry Paulson?
In my previous blog I commented about Henry Paulson leading the U.S. financial bailout plan. He, and people like him, seems to be too dazed by their own interests to make the best decisions for Main Street, hence the continued skepticism of the bailout plan. Although passed, the brakes on the stock market plummet are still not working. Here's what Paul Krugman says in The New York Times:
"The U.S should have been in a much stronger position. And when Paulson announced his plan for a huge bail-out, there was a temporary surge of optimism.
"But it soon became clear that the plan suffered from a fatal lack of intellectual clarity. Paulson proposed buying US$700billion worth of "troubled assets" - toxic mortgage-related securities - from banks, but he was never able to explain why this would resolve the crisis.
"What he should have proposed instead, many economists agree, was direct injection of capital into financial firms: the U.S. Government would provide financial institutions with the capital they need to do business, thereby halting the downward spiral, IN RETURN FOR PARTIAL OWNERSHIP (uppercase my own).
"When Congress modified the Paulson plan, it introduced provisions that made such a capital injection possible, but not mandatory. AND UNTIL TWO DAYS AGO, PAULSON REMAINED RESOLUTELY OPPOSED TO DOING THE RIGHT THING (uppercase my own).
"But on Wednesday, the British Government, showing the kind of clear thinking that has been all too scarce on the US side of the pond, announced a plan to provide banks with 50billion pounds in new capital - the equivalent, relative to the size of the economy, of a US$500billion program - together with extensive guarantees for financial transactions between banks.
"And the US Treasury officials now say that they plan to do something similar, USING AUTHORITY THEY DID NOT WANT BUT CONGRESS GAVE THEM ANYWAY (uppercase my own)."
----- Update ----
Paul Krugman won the 2008 Nobel Prize for Economics. He is an economics lecturer in Princeton University since 2000. He is a blogger and he writes for the New York Times.
"The U.S should have been in a much stronger position. And when Paulson announced his plan for a huge bail-out, there was a temporary surge of optimism.
"But it soon became clear that the plan suffered from a fatal lack of intellectual clarity. Paulson proposed buying US$700billion worth of "troubled assets" - toxic mortgage-related securities - from banks, but he was never able to explain why this would resolve the crisis.
"What he should have proposed instead, many economists agree, was direct injection of capital into financial firms: the U.S. Government would provide financial institutions with the capital they need to do business, thereby halting the downward spiral, IN RETURN FOR PARTIAL OWNERSHIP (uppercase my own).
"When Congress modified the Paulson plan, it introduced provisions that made such a capital injection possible, but not mandatory. AND UNTIL TWO DAYS AGO, PAULSON REMAINED RESOLUTELY OPPOSED TO DOING THE RIGHT THING (uppercase my own).
"But on Wednesday, the British Government, showing the kind of clear thinking that has been all too scarce on the US side of the pond, announced a plan to provide banks with 50billion pounds in new capital - the equivalent, relative to the size of the economy, of a US$500billion program - together with extensive guarantees for financial transactions between banks.
"And the US Treasury officials now say that they plan to do something similar, USING AUTHORITY THEY DID NOT WANT BUT CONGRESS GAVE THEM ANYWAY (uppercase my own)."
----- Update ----
Paul Krugman won the 2008 Nobel Prize for Economics. He is an economics lecturer in Princeton University since 2000. He is a blogger and he writes for the New York Times.
Monday, October 6, 2008
Economics 101, in my own words
After reading the article "Economics 101" in today's papers, I think I want to share what I have learned in my own words. This will help to crystallize my thoughts as well as help others to be more informed about the financial crisis on Wall Street. This crisis is resonating to the rest of the world. First, let's understand a couple of terminologies.
SUBPRIME LOAN: This is simply a loan given to borrowers who are at high risks of defaulting on repayment. In the U.S. it is reported that up to 25% of all mortgages are subprime.
CDO: Stands for collateralised debt obligation.In order to get money to loan out, the finance companies sell bonds ("IOU's", in simple terms) that yield high interest rates. Who buys? Pension Funds, local councils all over the world, trust funds, private investors, etc... all looking for high interest rates on their fixed deposits. These bonds were even given AAA rating by the ratings agencies.
Chief executives of big financial institutions are paid millions each year, yet they seem to have been sleeping on the job. They participated in the financial feeding frenzy that has allowed their pay and bonuses to balloon, while at the same time encouraging practices that border on the scandalous. The most outstanding of all must be Henry Paulson, the U.S. Treasury Secretary himself. As chief executive of Goldman Sachs he paid himself US$37mil in 2005. Goldman Sachs is one of the financial institutions that has to be rescued; so how could Henry Paulson have done such a brilliant job to earn him US$37mil in one year? Now, Paulson, as Treasury Secretary, is asking Congress for money to bail out all the companies that have participated in decades of financial madness. The very same person who seemed oblivious to what eventually brought Goldman Sachs down, is now trying to steer the U.S. economy out of financial ruins.
As for the U.S. bailout plan, here are some interesting points:
The US$700bil requested for bailout was an arbitrary figure. It was reported that a U.S. Treasury spokeswoman told Forbes magazine that "we just wanted to choose a really large number". Is that enough? I doubt it. The outstanding mortgage debt in the U.S. is US$14 trillion. As a quarter of that is subprime, that means US$3.5 trillion is at risk. Is US$700bil enough?
SUBPRIME LOAN: This is simply a loan given to borrowers who are at high risks of defaulting on repayment. In the U.S. it is reported that up to 25% of all mortgages are subprime.
CDO: Stands for collateralised debt obligation.In order to get money to loan out, the finance companies sell bonds ("IOU's", in simple terms) that yield high interest rates. Who buys? Pension Funds, local councils all over the world, trust funds, private investors, etc... all looking for high interest rates on their fixed deposits. These bonds were even given AAA rating by the ratings agencies.
Chief executives of big financial institutions are paid millions each year, yet they seem to have been sleeping on the job. They participated in the financial feeding frenzy that has allowed their pay and bonuses to balloon, while at the same time encouraging practices that border on the scandalous. The most outstanding of all must be Henry Paulson, the U.S. Treasury Secretary himself. As chief executive of Goldman Sachs he paid himself US$37mil in 2005. Goldman Sachs is one of the financial institutions that has to be rescued; so how could Henry Paulson have done such a brilliant job to earn him US$37mil in one year? Now, Paulson, as Treasury Secretary, is asking Congress for money to bail out all the companies that have participated in decades of financial madness. The very same person who seemed oblivious to what eventually brought Goldman Sachs down, is now trying to steer the U.S. economy out of financial ruins.
As for the U.S. bailout plan, here are some interesting points:
The US$700bil requested for bailout was an arbitrary figure. It was reported that a U.S. Treasury spokeswoman told Forbes magazine that "we just wanted to choose a really large number". Is that enough? I doubt it. The outstanding mortgage debt in the U.S. is US$14 trillion. As a quarter of that is subprime, that means US$3.5 trillion is at risk. Is US$700bil enough?
Thursday, October 2, 2008
'Concerned that cell phones may be a cancer risk?
Since cell phones were invented in the 1980's, there has been a constant speculation of cancer risks. Many scientific reports have been published; I won't dwell into that. Today there are 3 billion users of cell phones. Statistically the number of user-hours is astronomical while the number of possible links to cancer is hardly worth a mention. I am not down playing the possibility that cell phones may in some cases contribute to cancer. I just want to point out that this is an unnecessary concern at this time.
Consider this: airplanes have been around for a long time. Everyone knows air disasters do happen and will continue to happen. Yet almost everyone will continue to fly in an airplane. The reason is, the advantage far outweighs the risk. Back to the cell phone... even if a direct correlation to cancer is found, people will continue to use cell phones unless the risk is unacceptably high. Of far greater danger to health and safety are cigarettes, airplanes, or even simply crossing the road. Aren't we missing something here?
Consider this: airplanes have been around for a long time. Everyone knows air disasters do happen and will continue to happen. Yet almost everyone will continue to fly in an airplane. The reason is, the advantage far outweighs the risk. Back to the cell phone... even if a direct correlation to cancer is found, people will continue to use cell phones unless the risk is unacceptably high. Of far greater danger to health and safety are cigarettes, airplanes, or even simply crossing the road. Aren't we missing something here?
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