The New Path of FINANCE

When I first read the Reform Financial Bill, I was quite excited because it is supposed to overcome the hick ups of the recent credit crisis. But as I read it over and over again there are some things which need more attention.

Referring to my twitter, the consumer protection agency should protect the consumers of FSI's. I mean it just doesn't make sense if a bank receives tax payers money and yet still pay huge bonuses to its top execs.

Obviously the exceptions for big cos in derivatives trading is a major set back. The big cos have all the resources and will to make money, yet they will be spared the regulation on speculative trading, I presume. Initially companies trade in futures, options, cds, swaps etc to hedge against systematic risks but as time passed by everybody will speculate. By then 'BETA' will be a thing of a past.So a big company with vast resources will escape the evil mechanics of speculative trading but a small one will be subject to harsh regulations. It is not fair to the small fish.

The most interesting part is where the government can dismantle a healthy firm if they are considered a grave risk to the economy. So I guess Fannie Mae and Freddie Mac, GM, Chrysler would fall in this category. What if the white house did not approve tax payers money to bail out these firms? Certainly the US economy would come to a halt.Maybe BP and Enbridge would also fall in this category. But BP is British (with an American CEO of course) and Enbridge is a Canadian firm. I guess NAFTA(North American Free Trade Agreement) and free world is the obvious answer.

The word is CREDIT. To have a clean balance sheet banks can rely on Mae and Mac. Yes the bank's balance sheet is healthy BUT the burden has shifted to Mae and Mac. Mae and Mac have no one to turn to except the government in order to clean its balance sheets.Its like transferring our credit cards balance from one bank to another. No matter where we move those credits it is still there in the cycle. We must find a way to eliminate that cycle. In my opinion this is the real cause of credit crunch. The property bubble and high interest rates is just part of it.

BUT as my critics will say who am I to talk a lot about bankruptcy, winding up and foreclosures...

I knew from October 15th 1990, as I reached KL, Malaysians hated me. And it will be 20 years come 15th October 2010. Malaysians DISLIKE me but I am not allowed to go to Canada.Isn't that stupid? If Malaysians hated me say 1001 times then I also hate Malaysians a million times.