About Gossips & Rumours



SHOULD WE TOTALLY TURN A DEAF EAR TO GOSSIPS AND RUMOURS?
Recently, I received a short article from a friend regarding a great philosopher way back 2,500 years ago who was admired for his words of wisdom. I believe the crux of the story could be a true event but a smart guy from somewhere in our modern era creatively added in slight twists, especially the end part. Although the twists seem an act of mischief which should be ignored, yet upon my reflection, I feel there is a valid point to what the “twister” was trying to convey.

The story goes like this (together with the twists)………..

One day, a disciple of the philosopher excitedly approached and said: “Master, I just heard something about another teacher that is being spread around. I want to tell you about it………” The sage quickly interrupted and told that the latter had to pass three positive test questions first before being allowed to proceed further. 

The first test question was, whether the information being spread around was without doubt confirmed as true. To this, the disciple replied: “I don’t know…….I was actually told by a relative who said he had heard a group of people in the neighbourhood talking about it.

The second question was, whether the information was something good about the other person. “No, on the contrary,” was the retort.

At this point, the sage remarked that the answers to the first two tests failed to meet the positive requirements but his disciple could still qualify to proceed telling him the rumour if the response to the third test was in positive mode. “The third test is on usefulness. Is what you want to tell me useful for my work or will make me happy?” The much younger man paused for a while and replied in a solemn tone, “No, I don’t think so.”

The wise master then summarised that if the information may not be true, not good about another person and not useful to the listener, there was no point to discourse further on the subject as it would not be beneficial to any party. He also reminded his disciple to refrain from rumour mongering.

The disciple walked away in dismay of his own imprudence.

The story is an example of the wisdom of the great philosopher and why he was revered for his philosophies. 

Now, comes the main twist as the end of this story……..

It also explains why the great philosopher never found out about the rumour that the other teacher was having an affair with his wife and stealing some of his philosophical works while the sage was away fully engrossed in sharing his philosophies.

Perhaps, the following may be valid moral of the story with its twists:

*Have an open mind for listening.
* Listen first to decipher the relevance of what is heard. Check it out if need be.
* Even the wise may not be perfect. They can misjudge.
* Sometimes, rumours and gossips may be useful as “signals” of the trend and for preparation to face what may likely come your way.  

Quotes from a Greek philosopher:
“As for me, all I know is that I know nothing.”
“Wisdom begins in wonder.”
“Wisdom is knowing how little we know.”
“By all means, marry. If you get a good wife, you’ll be happy; if you get a bad one, you’ll become a philosopher.”

Cheers to philosophies and moral lessons.






Austerity Is Dead........


Austerity is dead…. New printing of flat money/lower rate? (contributed by Chan Cheh Sing)

On 12th May 2012, the People’s Bank of China lowered the reserve requirement ratio by 50 basis points. It is the third cut in the reserve ratio so far in the current cycle of monetary-policy loosening, with the previous two cuts in November and February.
The ratio, or the level of deposits that banks in China must hold in reserve rather than lend out, will drop to 20% after the latest cut takes effect.
What is worrying the PBoC?

In April 2012, renminbi deposits fell by 465.6 billion yuan.  A year ago, they increased by 342.4 billion. This could only mean deposits were fleeing the Chinese banks, thereby reducing the amounts banks could lend. Also In April 2012, new renminbi-denominated lending fell 8.2% from the same month last year and 32.6%—329.6 billion yuan—from this March.

What will China government do?
·         Cut further. They may even ask the bank to cut lending rate.
·         Re-order huge infrastructure building.

In Europe, previous ruling parties are falling like snow. Those who support austerity are voted out. But, does that mean EU is ready to print money?

The bias is to print, to flood and to spend. But will it work to revive the economy globally??
The answer is to NO. (The problem is in the money transmission system, especially the institution)

Then which asset class will be a buy, which will be a sell?
·         If the fundamental is not going to be good (and go worse if the problem is prolonged), then bond is a buy. The emerging market local bond is a buy (do pay attention to currency swing, if your base currency is USD). Developed market will act as buffer to lessen volatility.
·         Gold will be sold off either EUR survives or EUR cracks. Both cases are a confident vote to flat currency.
o   If EUR survives, then the fear that EU will break up will dissipate, and confidence on paper currency will return.
o   If EUR cracks, then the EU17 members will go back and print their own currency. Then each country will defend their currency. This means they will not let gold be the medium of exchange… gold plunges.

·         Equity will rally… but not take recent high as seen from the QE I & II; there is a margin of diminishing return. 


The end.


















































































LATEST IN GLOBAL ECONOMY



GLOOM IN GLOBAL ECONOMY CONTINUES UNABATED FOR NOW

All is not well in the global economy; in fact all may likely loom into further tumult for the rest of the year, probably spilling into 2013 without sanguine signs of reprieve in the near term, if the latest commentaries and news reports are deemed as references to be relied upon.

Rather than presenting in an intense saturated narrative format, which is the usual style deployed by most media columnists, instead I prefer to list out some key developments in point outlines so that it is easier for readers to grasp my overview of the overall economic atmosphere. I now go straight to the points.

Ø  Asian currencies at large has witnessed the sharpest drop since last November as continuing concerns regarding the Europe debt crisis rallied a demand for USD, which is still considered the safe haven in event of unfavourable global trends. Strong market forces in favour of the dollar have added more frigid sentiments.

Ø  Investors are shying away – in fact drawing their money out – from riskier assets because of lingering concerns on economic recovery prospects and on Europe’s issues.

Ø  Due to discord among political leaders in Greece about austerity measures after the recent polls, Greece has been unable to form a government, thus paving for another election to be held.

Ø  Asian shares ended lower last Friday (May 18, 2012) due to concerns about the global economy, coupled with escalating banking crisis in Spain and political uncertainty in Greece that has fueled expectations of Eurozone breakup.

Ø  European parliament chief Martin Schulz has warned that the Greek economy could be devastated if Greece really goes for exit from Eurozone, and to him that would be “the beginning of an even more negative cycle.”

Ø  The jobless rate in Greece hit a new high in February. More than one in five Greeks and more than one in two youths are out of job. At more than 21% unemployment rate, nearly 1.1 million people are without job.

Ø  Germany, the big brother of Europe and Eurozone, experienced stagnant growth as at April.

Ø  Asia Pacific nations are experiencing slower growth emanated from troubled export markets and rising commodity prices, according to a United Nations report. The greatest threat to the region is the issue of debt default in the Eurozone.

Ø  China’s residential property prices fell in 46 out of the 70 cities tracked by the government in April from a year earlier.

Ø  The Chinese monetary authority cut banks’ reserve requirement for the third time in six months to support the Chinese economy which recorded in the 1st quarter the slowest growth pace since mid-2009. Goldman Sachs lowered the country’s 2nd quarter estimate to 7.9% from the earlier projection of 8.5%. Likewise, the growth rate for 2012 has been reduced from 8.6% to 8.1%.

Ø  Although Japan’s economy expanded faster than expected in 1st quarter due to boost from reconstruction spending, it is yet facing imminent slowdown in view of Europe’s crisis that would curtail export demand. Estimated growth rate of 2.2% in 2nd and 3rd quarters could trim down to 1.7% in 4th quarter.

Ø  Hiring in the US seemed to have picked up in April but at modest level, with new 163,000 jobs added into the market compared to 120,000 in March. However, this was not sufficient to further lower the unemployment rate now still standing at around 8.2%. An average of 246,000 jobs were created a month from December 2011 to February 2012 but significantly slowed down in March, which thus sparked worries that job growth was weakening. In fact, some people have given up looking for work. The current unemployment rate portrays a superficial picture of the unemployed situation. Those out of work but not looking for jobs are not included in the unemployed computation.

A friend who is in unit trust sales just told me that the forthcoming 2012 London Olympics commencing in early July should in some ways pep up economic activities not just for the UK, but also Europe to some extent? He expects the Asian markets to rally again and prices should pick up around September. He said this was the tip he received from his company’s fund manager. Well, I can only say, “Let’s wait and see.” The UK may definitely go into a hype of economic activities, especially tourism and retails related, for a while as the spin-off from the Olympics. But will there really be a positive impact to other regions?.......I do not really perceive how. Again, let's wait and see.

The end.

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