Today’s copy of The Star has an article rather naughtily entitled “Night market hides a foreign secret”. It’s about a market in Sungai Buloh New Village that is operated mainly by traders of Bangladeshi origin and caters mostly to other immigrants. Even though the reporters note that the traders sell pretty much the same things that you might expect to find in a typical Malaysian market and they manage to do it at a lower price than comparable Malaysian traders, the idea that it needs to be hidden implies that this is something wrong or shameful. The article even chose to highlight only comments from those locals who happen to know about the market that put it in a bad light, complaining about how the traders there have stolen business from them, how it has become a gathering place for Bangladeshis and how it’s illegal and protected by thugs.
As often is the case, the article showed up as a discussion thread on LYN, I was pleasantly surprised to read the rational and economically literate reactions from the posters there. One posted that the government should issue them with permits and that they should be allowed to operate as they wish so long as they obeyed the country’s laws and paid their taxes. Another noted that having the local council maintain them as illegal businesses simply meant that the police and other local authorities would be able to extract regular bribes from them. Yet another posted that at least these people were willing to work hard for their money instead of posting silly rants online.
So it seems that there are moderate Malaysians who recognize that this market isn’t only harmless but actually contributes to our national economy. Which makes it doubly sad that a national newspaper like The Star would choose to skip this higher and nobler road of educating the public that immigrants are ultimately a net good for us and instead pander to populist, economically illiterate and racist anti-immigrant sentiment.
By way of Jed Yoong’s blog, I’ve learned of the Bicycle Campaign by Jerit, short for the Malay name of the group, Jaringan Rakyat Tertindas. The campaign which starts today involves cyclists setting out from both Kedah and Johor towards Kuala Lumpur. They plan to stop at every town and city along the way to raise awareness of their demands. When they reach the capital on the 18th December, they plan to hand over the full list of their demands to the Prime Minister Abdullah Badawi.
I found this Visual Guide to the Financial Crisis on mint.edu which I think is absolutely essential reading for anyone who is still bewildered over what’s happening. If you don’t have the time or can’t muster the attention to read lengthy analysis pieces and papers on the events leading up to where we are now, this makes for a decent, easy to understand, summary.
With the news of Citigroup getting guarantees worth US$300 billion in addition to a direct bailout from the TARP funds, there goes hopes that the financial crisis is coming to an end. Remember that not so long ago, before its share price got heavily hit by the mess, CItigroup was the biggest bank in the world by stock market capitalization. As Crooked Timber noted, not only is Citigroup the very definition of “too big to fail”, it’s so big that not even the mighty U.S. government could save it if it goes down.
Here’s a couple of links to some of the best articles on the crisis that I’ve read. A short history of modern finance from The Economist explains the two demonized financial instruments at the heart of the crisis, Collaterize Debt Obligations and Credit Default Swaps from a historical perspective. The article not only explains how they work, but also when and why they were invented and what purposes they serve in finance.
The End of Wall Street’s Boom published by Portfolio and written by Michael Lewis who gained famed for his 1989 tell-all book Liars’ Poker about the bond market. This article covers the boom and bust of the subprime mortgage market from the perspective of various industry insiders.
Anyone who plays MMOs will know how insistently gold sellers spam their services. Many of these outfits get their gold (or equivalent virtual goods) from legions of Chinese players for whom farming the virtual currency and selling it to more affluent players mostly from western countries at a mark-up has become their primary occupation.
Now The Wall Street Journal reports that the Chinese government is getting in on the action by imposing taxes, now set at 20%, on profits earned from such sales. I’d imagine that the move is less as an effort for the state to gain tax revenues from the growing industry than to dampen it and keep it under surveillance. If virtual currency can be freely convertible into Chinese yuan, it’s easy to imagine that it might one day cause problems in the greater financial system, given how tightly the yuan is regulated.
What will be interesting, as the article notes, are the implication this has for the legal rights of owners of virtual goods. If the Chinese government legitimizes the trade of virtual goods, does that mean that the players own the goods as opposed to the MMO companies?
Two weeks ago, I wrote a blog post saying if any public official in the U.S. ought to be blamed for the current mess in the financial markets, it ought to be Alan Greenspan, the former Chairman of the Federal Reserve. A couple of days ago, at a Congressional hearing, Greenspan admitted that he had made mistakes, while stopping short of taking full responsibility. He also admitted that he had failed to take action earlier for idealogical reasons, believing that the markets would be self-correcting.
It’s a bad time to believe in capitalism. As a poster on QT3 remarked, Greenspan was “like BFF with Ayn Rand and everything”. Hopefully, I’ll have time to write a spirited defense of capitalism next week.
This is as good a time as any to post a link to Sad Guys on Trading Floors, a photo collection of traders’ reactions to the continuing financial meltdown. The U.S. Federal Reserve just dropped the federal funds rate by 0.5 percent to 1.5 percent, while central banks around the world followed suit, and the markets still dropped. The U.S. Treasury stated that it might have to take ownership of U.S. banks and U.S. House Speaker Nancy Pelosi has just announced a proposal for yet another stimulus package worth US$150 billion to be spent in a Keynesian attempt to jump start the American economy. All of that is just today’s news.
Remember how AIG was bailed out by the U.S. government to the tune of US$85 billion just a couple of weeks ago and needed another US$37.8 billion yesterday? A report today details a week long “conference” organized by the world’s largest insurer for its top agents at a five-star resort in California costing more than US$400,000.00 just a few days after the first bailout. As the saying goes, we live in interesting times.
