Genting

VERY IMPORTANT EDIT HERE:

At this moment in time, I have some small amounts of short positions in Genting, made via CFD via POEMS, Singapore. (phillips online e-mart)
I was reminded by a friend that it is only ethical to state that I have a personal stake. However, I would like to clarify that I am a long term investor not a trader, and thus do not really care whether Genting drops in the short term or not. I am going to wait until the profit figures come in before closing my position. However, considering the current economic climate, I think I'll be holding onto this position for quite a while....


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Genting shares have been spiking upwards lately. Some say it is a recovery. Partly true. Part of it was the recent worldwide rally. Another factor is: Las Vegas Sands> Singapore.
Sands had seemed in danger of liquidity issues. So, there was speculation that they would be selling off their stake in Marina Bay. The likely buyer? Genting, of course! This would have been a big boost, as Genting’s own resort on Sentosa is considered inferior.
But Sands seems to be fine now. And they are closing many other projects, but NOT MARINA BAY. Which they are going to push aggresively as soon it is ready at the end of 2009. Which will give them time to set up a loyalty base before Sentosa complete in 2010.
The question now is: If you were a bigshot VIP. Would you want to go to Sands Marina Bay, Genting Sentosa, or Genting Highlands? … yeah, me too. So, in other words, you can expect some pretty UGLY financial figures coming out for Genting in the coming years.
Considering how cheap AirAsia is now, with fuel surcharge dropped, I think even the smalltime gamblers are going to be abandoning Genting Highlands for Marina Bay.
Seriously, the last time I went up to Genting, their casino was looking really seedy and low class. Even the small time gambler wants a bit of AMBIENCE… you know?
Genting also chose a rather poor time to expand very very aggresively. They’ve probably overstretched themselves and also paid far too much in return for far too little. Genting. The fellas who set up a well-run casino are NOT STUPID. There’s a reason they were willing to sell to you. There’s probably some nasty little problems that they were in a better position to know than you (since they live in that area every day, and you live in freaking Malaysia).
Basically, I always used to like holding Genting for one reason, and one reason only: Genting had a very strong monopoly. It had the only casino in the area. Even though, frankly, Genting casino is on a mountain. In the jungle. In the middle of nowhere. It still had a monopoly!
Now… the monopoly is threatened. By Sands Marina Bay (and AirAsia cheap flights).
My recommendation: dump Genting like a rock. Having a rival casino that is newer and fancier and everything means that it’s long term prospects are bad. And the economic crisis means it’s short term prospects are bad too. Dump Dump Dump!

Refinancing Credit Cards

We were just discussing on Fusion Investor’s Chatbox…
What would happen if the USA decided to do the same with Credit Card debts as they are doing for mortages?
Well, THAT would end the recession instantly! Watch as Consumer Spending shoots through the roof!
…
Until the next quarter when credit card companies announce that their new delinquency rate has shot up to 90%. I dunno, maybe they will announce that their plan is successful beyond their wildest dreams? hahaha.
Yeah I’m imagining now… if those idiots negotiate with American Express and tell them that a condition of the bailout is that they extend similiar facilities as FanMaeFedMac. … American Express declares that they will allow refinancing and will lower interest rates for everyone who is unable to pay them for 3 months.
…
IDIOTS!!!!

Refinancing mortages

Well, that’s all well and good. It’s totally necessary in fact.
I would like to remind people that refinancing a mortage at lower interest rate is going to cut into profits though! (duh. If your customer was meant to pay 1000 a month and he now only pays you 500, your bottom line is in DEEP trouble)
Furthermore, it’s quite easy to refinance downwards, but you can’t later say “the economy is picking up, let’s raise your mortage rate arbitrarily!” … in other words, these refinancings will slow down recovery in the mortage sector for… oh, say the next 20 years until the mortages complete? So… refinancing 1/3 of your existing mortages at lower rates. Ok.
And, BTW, they are saying that payments STILL need to be made. So, those who just lost their jobs and can’t get new ones are still in deep trouble anyhow. … BTW, citi is not doing this for the sake of the homeowners. They are just trying to avoid/ delay a spiralling vicious cycle of property collapse + even more foreclosures.
My projections are: those mortages? They’re going to turn VERY toxic very soon. Why?
Cause Citi has just basically announced: If you stop paying your mortages, we’ll drop your mortage rate.
YEAH. If you look at it like that, suddenly their announcement doesn’t look so smart, does it?
Basically, how are you supposed to separate those who NEED the refinancing from those who don’t? Citi thinks they can do it based on their analysis department I suppose. Unfortunatly, they haven’t learnt the lesson that their risk analysts haven’t been doing a very good job lately.
Their offer to reduce rates for 1/3 of their mortages will probably end up causing them to lower rates for 100% of their mortages.
There is a VERY good reason why the previous system was in place people. You know, previous credit syatem, you make all your payments on time, your credit rating is good, you are charged lower interest, so the incentive is to pay on time? … Now it seems that when your credit rating goes SOUR, your interest rate is going to fall.
Hello. You don’t have to be a rocket scientist to figure out that, in this situation, if Person A,B and C look and sees Person D stopped paying his mortage… and his interest rate got dropped, and he then resumed paying his mortage… Person C will also delay payments and request a reduction. Then B joins in. Eventually your mortage system goes to hell. Oh wait, aren’t American mortages ALREADY in trouble?
UPDATE:
http://www.thestreet.com/story/10447292/1/feds-streamlining-homeowner-aid.html
“To qualify, borrowers would have to be at least three months behind on their home loans, and would need to owe 90% or more than the home is currently worth”
HELLO!!!! HELLO!!!! You guys… are warning bells not going off in your heads right now? Seriously???
Hello??? Again, america is rewarding failure. does america understand??? you are giving INCENTIVES to FAIL. Giving out bailout money without requiring red tape OR punishments to Director renumeration… INCENTIVES TO FAIL are a blindingly obvious bad decision.

Malaysia Bloeh???

(this is from Nov 12 2008, when KLCI was stubbornly green ignoring the entire rest of the world)


This is hilarious. Dow is -176. Crude Oil is falling. CPO will fall. Regionals all down.
KLCI is GREEN.
Why? … I suspect that KLCI is taking heart from Singapore being green. The thing is… Singapore, they just had good news that Las Vegas Sands casino project is still going through.
Btw, this means that Genting shares are looking worse and worse.
Waiting for many people to get badly burnt by their overoptimism. As Dali pointed out, world property prices are crashing, but only Malaysian sellers are (foolishly) refusing to sell unless they get better price offers. In fact, this has really put a freeze/gap on our secondary property market. Malaysian property BUYERS however are being much more cautious… this situation will go on until the sellers get into serious financial difficulties. Which won’t be long more, I suppose. I advise everyone who is considering selling their excess/investment properties to just take sellers price. Better a 10% loss than a 30% loss. The finance charges on that apartment get sold along with the property, you know?
Malaysia boleh???

General Motors

Summary at the end as usual.

Well, basically, everyone knows about General Motors, right?
A bailout would require probably USD50billion, I guess. You might think my figures are wrong, but let’s face it, look at AIG, it is obvious that even the best economists and financial guys have no idea what a bailout will end up costing. But, I’m basing this on the fact that they burnt through 6.9b in 1 quarter. It looks like the automobile industry might take years before recovering. As I said, it’s just a guess on my part.
However, letting GM go under is not really an option either. They are estimating (maybe overestimating) that GM going bust would mean a loss of 2.5million jobs in America. Oh dear. That’s not good at all, especially in a recession! … The thing is… it has been stated that EVEN WITH a bailout, many many jobs will be lost. There’s just too much excess production capacity.
Anyhow… there is a 3rd option that I have come up with. It’s cheap, and it’ll save the most jobs too!
Nationalize General Motors.
Why not? It’s practically a household American name anyhow. It’s not really doing that well profit wise. Most importantly, at the current share price, IT WILL ONLY COST USD1.6BILLION.
Yeah. We’ve reached the point that a bailout for GM, instead of being like 10% of the company’s value, or even 50%, is in fact more than 10 times.
So, it is the cheapest and most effective measure at this point for US government to just force a mandatory purchase of GM. Heck, they can even afford to give current shareholders a 50% premium on the market price. It’ll still cost under 3b, which is WAY WAY WAY cheaper than any bailout could ever be for GM.
Everyone in Malaysia talks about taking companies private when the share price is too low. In fact, GM is currently the best candidate to be taken private. But ONLY if it’s by the American Government. Unless… well, maybe Warren Buffet used up his warchest too fast? hahaha, but he’s still got plenty of money left. Buffet, put your money where your mouth is and BUY AMERICAN. This is the patriotic thing to do!

Summary: US goverment should just buy up all outstanding General Motors shares, and nationalize the company. It’s CHEAP and EFFECTIVE!

OK, the INAUGURAL POST!!! Let’s discuss… the world markets and LENDING.

For those of you with short attention spans, just skip to the SUMMARY at the end. I think I will try to maintain this format in future posts too.

OK. Let's start my blog then.

First, off, let's look at the Great Depression.
http://en.wikipedia.org/wiki/Great_Depression
We can see from here that everyone blames CREDIT FREEZES and lack of EMERGENCY LENDING by the FED for the disasterous recession. It is extremely obvious that the international banks have all agreed that they are going to focus on increasing lending, in order to avoid a second Great Depression. They probably have some textbook gameplan just for such and such an event, actually.
WRONG, GUYS.
Yeah, it might seem really arrogant of me to just contradict all these so called financial experts. But let me point out that these current steps are not something they've really thought out clearly. They are just trying out what they didn't get a chance to do back in 1929.
Now. WHY won't it work?
It's all really simple, if you sit down and think about it.
What is the FIRST step to surviving a recession, for an individual? Basically, what should an individual do to maximise his chances of seeing it through and eventually being on strong grounds when the economy eventually does clear up?
First, you need a stable job. (so Kennedy's nonsense about paying people to dig holes and others to fill them in doesn't work. You need to provide JOB SECURITY too.)
2nd, you need to reduce your debts! This is elementary school people. Those who are debt free will be in a MUCH stronger position than those who are heavily in debt. BUT... the governments are trying to encourage increased borrowing! ... Actually, anyone with eyes can see that the current corporate bailout plan is going balls up. Seriously people, it is a simple simple basic financial management principle: you should borrow at 3% in order to generate 4% returns. You don't borrow at 3% when you are expecting to generate -2% returns!
Do these stupid governments think that being able to put themselves deeply into debt will increase/ preserve consumer spending? ... obviously, these financial whizs and government folk have not spent enough time BEING POOR. For those who are familiar with the feeling, you will realise that being jobless, your home and in fact your total networth just dropped in half, your government is going BADLY into debt and is spending taxpayer money bailing out corporations... enthusiasm to spend money? ... are you MAD???
HOWEVER... I am very much in favor of repacking current debt. It makes a LOT of sense for those who have credit card debts to be able to pay those off and shift them into mortage debts. Basically, you would want to reduce monthly debt payments by shifting from higher interest to lower interest charges.
UNFORTUNATLY for the banks... this means that bailout of the banking industry is a failed enterprise from the get go. The will be banks runs. There SHOULD be bank runs. ... Why? Well... it's a simple next step extrapolation:
The FED has reduced their interest rates to a mere 1%. Even a really stupid person will look at his bank savings account gaining a lousy 2%, and look at his mortage at 3 times that, 6%, and realise that they should really break those fixed deposits... This is even more so for credit cards. And those who do not come to this conclusion themselves, if they go to a financial planner, the financial planner would definitely tell them this. It would be STUPID to have $10,000 earning you $20 a month interest in savings account, and at the same time you have a $10,000 credit card debt costing you $200 a month.
SO. Conclusion. America is bailing out banks with it's left hand. The world is creating bank runs with the right hand. Reaaaaaaal smart. You morons.
So, how long will this recession last? It took a world war and wartime industry to end the last Great Depression. Will it get that bad? Who knows. Ok. More realistically? This recession will end when consumer spending increases. Consumer spending will increase when consumer INCOME increases. UNFORTUNATLY, the stupid world governments (except for China, who is being applauded by everyone, despite being the odd man out... which should say a lot! China=smart, the rest of you=stupid. And I'm glad all of you nations recognise this and say so too), are totally ignoring RAISING GDP. They are not looking at helping out the people by creating jobs and job security and by making sure that the bottom 30% of the population will be ok. NO. They stupid Americans are bailing out the top 0.01% of their citizens!!! Who are throwing parties, BTW. Look at AIG. In AIG's case, they got caught, so they tried making it SECRET parties. Nonetheless, they got caught again. People are... *angry*...
You know what the big difference here is? ... I am ashamed to admit it, since I am an avowed capitalist. But... seriously there is something to be said about communism... they really make it a priority to protect the poor, not the super ultra rich and powerful! (though the controlled economies tend to fail spectacularly at the slightest hint of corruption since the system is non-self regulartory... communism means there is no policeman to catch the corrupt policeman)

SUMMARY:
Look, when the citizens and corporations are losing income/ have NO income/ have LOSSES... and they also have outstanding debts, which are causing them to suffer... you do NOT throw even MORE debt on them! Repacking debt is a good idea though. Not like AIG's case, however, since that is essentially not repacking debt but is a DONATION from TAXPAYERS to AIG. You should be concentrating on REDUCING expenses, and INCREASING revenue. Very basic. Very simple. So, do it, world governments.
To investors and shareholders: The governments are making an even bigger mess of things. STAY OUT of the market. In fact, I would recommend that you take your investments, your 401k plan, your savings accounts in banks which are rated C or lower, withdraw them all. and put them in banks with guarantees, which are rated as A to A+. Trust me even the A rated banks are not as safe as they might seem. Also, get out of banks that just bought over a failing bank. TRUST ME, there is a very good reason why those banks failed, they have some pretty toxic assets there, you do NOT want to one day read headlines that consumers had lost faith in the bank you are using and the bank has policemen outside refusing to allow customers to withdraw their deposits. Preventation is better than cure. Seriously, why not just put your money in the most secure bank possible? Do you REALLY love your current bank so much?

Moving to Blogspot

Financialblogs has terrible layout and stuff... it might be cause they are inexperienced and still in the teething stage. But I haven't been there long enough to feel any loyalty to them, so I'm taking the better option now. Transferring all my posts too.