By Sakina Mohamed

This is the first of a two-part series on Grameen Bank, the first in the world that gives out loans to those who live below the poverty line and revolutionised banking worldwide. The first part explains a brief history of the bank as well as its latest updates and efforts, as revealed by its founder during his recent visit to Malaysia.

KUALA LUMPUR, Dec 29 (Bernama) -- Who has heard the story of a bank that has loaned over USD10 billion to the poor without collateral, yet has a repayment rate of over 98 percent? For those who have yet to hear the story of Grameen Bank, the world's first micro-credit organisation, is indeed an extraordinary one.

Despite defying all the rules of conventional banking, Grameen Bank has single-handedly lifted the Bangladesh poor from poverty. More amazingly, it has even reformed social development and economy not only in the country but across the world.

The man that came up with the idea is now befittingly a Nobel Laureate. Professor Dr Muhammad Yunus, founder and Managing Director of Grameen Bank, started the bank while his country was going through famine in the 1970s. And his inspiration came one morning in 1976, while he was walking past a village to the university in which he served as an economics professor.

"I encountered a poor woman who explained to me that she earned only two cents a day from making these beautiful bamboo chairs, all because she had to borrow from a loan shark. The loan shark had demanded that she sell her products to him at a price so low that she made a profit of only two cents a day".

Muhammad said at that moment, he needed to pay the loan shark only USD1 to set her free from debt and help her out from that cycle of poverty. And so he did.

The happiness and relief in the poor woman inspired him to look for other people in the village who owed the moneylender. He found 42 people who needed a total of only USD27 to pay off the loan shark, as well as to buy raw materials for their businesses. With that amount of money they managed to become debt free and at the same time sell their products to the highest bidder, thus improving their economic status.

In doing so, he found that he had helped the first woman make a profit of USD1.25 a day, instead of only two cents. Thus began a journey for Muhammad to set up Grameen Bank which breaks the cycle of "low income, low saving and low investment".

Muhammad shared the inspiringly famous history of the bank during a luncheon in Malaysia recently, while delivering a keynote address titled "Social Business and Poverty Reduction". The special luncheon was organised by Khazanah Malaysia and the Malaysian Directors Academy (Minda).


Grameen means "rural" or "village" in Bangla. Its tagline is "Bank for the Poor". It provides micro credit to the rural poor in Bangladesh, so that they may start or finance their business and keep their income growing.

Muhammad says the bank lends tiny loans of USD200 per month to about 8.3 million borrowers all over Bangladesh and are paid back in weekly instalments. Amazingly, although the bank lends out to those living below the poverty line, it manages to recoup nearly 98 percent of its loans.

The economics professor says one basic fundamental of the banks since inception is that banks should go to the people and not the other way.

"We meet all these 8.3 million borrowers at their doorsteps. They don't have to go anywhere. We meet them every week and do banking at their doorstep.

"It's a big task. But it's the only way we can get them to do banking with us, as over 97 per cent of our borrowers are women. If you ask them to come to our office, it won't happen. The men will take over, being the mobile ones. Women usually stay home trying to settle numerous tasks in care giving", he explained.

An inevitable question arises: why does Grameen Bank tend to give out loans to women? The bank's website addresses this frequently-asked-question with the following answer:

"Women in Bangladesh are neglected by society. Through the opportunity of self-employment and the access to money, Grameen Bank helps to empower women. In addition, studies have shown that the overall output of development is greater when loans are given to women instead of men, as women are more likely to use their earnings to improve their living situation and to educate their children".


Today Grameen Bank is owned by the rural poor whom it serves. Borrowers of the bank own 90 percent of its shares, while the remaining 10 percent is owned by the government.

While watching the success of Grameen Bank in elevating the living standards of its borrowers, another question came to Muhammad's mind: what will become of the future of their families?

It was a natural question to ask, considering that the parents are mostly illiterate. This almost guarantees the perpetuation of the traditional cycle of poverty, ill health and other social maladies that come with it.

"We decided that we must ensure the children of all these families go to school in order to break out of that cycle and move on to a different direction", he says. So that plan was then set into motion.

Then a wonderful and unexpected thing happened. The children not only went to school, but thrived and excelled in their studies. They soon found themselves going to high schools and subsequently, colleges.

"There were thousands of them, flourishing and excelling in school. We didn't at all expect this as we thought having them go to primary school was the best achievement we could hope for from these Grameen kids. But the reality turned out to be much better than we expected", he says.

But then another problem surfaced. While parents were happy that their children were progressing academically, they soon realised that the cost of tertiary education was beyond their means.

"So then we had scores of children who were academically excellent but couldn't further their education. We debated within Grameen bank on how best to ensure that they stay on, and we came up with this solution - to introduce the education loan. Now, nobody is left behind".

As a result, there are now more than 50,000 students with Grameen education loans in medical schools and engineering schools in universities across Bangladesh.

Muhammad believes that children from wealthy families are no different than the poor ones in terms of capabilities. However, opportunity-wise, there is a big difference.

"And that makes all the difference in their lives.

"If the poor children could go to the best schools in the world and compete with their best talents, they'll be as capable and as talented as everyone else."


Muhammad speaks fondly of Malaysia and his relationship with Khazanah Chief Executive Officer Tan Sri Azman Mokhtar. The former has visited Malaysia many times, even before the Grameen idea took off outside of Bangladesh.

"Malaysia is almost like my second home. In fact, the first time the Grameen idea was taken outside of Bangladesh was in Malaysia, with the first application in Penang", he revealed.

In 1994, Malaysia bestowed Muhammad the Tun Abdul Razak award in recognition of his remarkable contribution to the world. Since Grameen Bank's inception in 1976, he founded 25 companies, all of which aimed at improving the living situation of the poor.

He says on hearing his sentiments on education, Azman immediately come up with idea of providing scholarships to Grameen students to study in Malaysia.

Today, Yayasan Khazanah sponsors 10 students who are children of Grameen Bank employees in select universities in Malaysia via the Khazanah Asia Scholarship. The foundation also continues to annually select five students from families that are served by the Grameen Bank to be recipients of the scholarship.

"The students that get this fantastic opportunity are from families with very low income", explains Muhammad.

He describes the programme as one that binds both Grameen and Khazanah very closely and says he is happy with the partnership.

Today, the bank is the source of ideas and models for many institutions in the field of micro-credit. But in Bangladesh, it represents a whole lot more.

"It is the future of the second generation of borrowers", says Muhammad.

"Of where they can go, and what they can be. They no longer have to go back to age-old cycle of poverty. They can now take it forward".


Posted by Mr Thx Wednesday, December 29, 2010 0 comments

Who doesn't like the fresh start of a new year? A clean slate and an optimistic outlook make January 1 a magical time. The only problem is that every year we vow to take care of our finances, but we ultimately get sidetracked with excuses. But this year will be different, and to help, here are some smart money moves for the New Year.

Review the previous year
What better place to begin a new year than to reflect upon the past? Take a look at last year's budget, identify the good and bad money moves you made last year and resolve to make the necessary improvements for the upcoming year.

Set one financial goal
Keep it simple this year and set at least one goal you'd like to achieve by the end of this year, then put all of your focus and energy towards achieving the goal.

Some financial goals could be to:

— Automate your finances
If your money seems to slip through your fingers before you can save any of it, putting yourself on an automatic savings plan to debit even $50 per month from your account is a good way to save without feeling the pinch. If you don't see the money, you won't miss it and before you know it, that $50 per month in savings will be $600 at the end of the year.

If your problem is more that you keep forgetting to pay bills and end up paying interest on overdue bills, you can also automate your bill payments by calling the companies directly to ask if they can debit your account every month, or talk to your bank about automating your recurring bill payments.

— Improve your investing knowledge
This is probably the area most people are afraid of. Of course it will all look confusing to begin with if you want to tackle everything under the sun in a short amount of time. So start slow and simple with something like learning what bonds, stocks and mutual funds are. For each topic, apply your newfound knowledge towards your money so that the information becomes relevant to you.

Your company might also offer free seminars to understand your finances better. You can also go online to learn the basics at your own pace.

— Get out of debt
For anyone who is in debt, it is really better knowing what your financial situation is than to stay in the dark. Next, create a budget listing your net income per month and where you plan to spend your money in each category.

Once your budget is done and you know what you have to work with, make a separate plan to get out of debt. Start by listing all of your debts, their interest rates and minimum monthly payments.

Now minus the total amount of minimum debt repayment you'll have to make each month, and whatever is leftover should be applied to either the lowest debt balance you have or on the debt with the highest interest rate.

As you clear each debt, take the amount you used to pay towards that debt and apply it to the next debt in line until you're debt-free.

You may find that your minimum payments equal or exceed 15 percent of your net income. In that situation, you will need to adjust your budget percentages and cut back on your housing, life or transportation costs, or simply make more money.

Don't rob your savings category in the beginning to pay down your debt. You should save a minimum of $1,000 for emergencies before adjusting your savings. Top 5 budgeting questions answered

Make a plan
Keep it simple and make sure you've covered all the bases for each goal. For example:

Goal: Save $5,000 by the end of the year for an exotic holiday vacation.

Step(s): Save an additional $417 per month, or $208.50 per bi-weekly paycheck.

The Plan: Review your budget and set up an automatic withdrawal from your paycheck into a savings account.

The bottom line
There are plenty of other goals out there, such as buying a home, a new car or going on a European vacation. The main thing to remember is that without a plan, your goals will always be dreams.


Posted by Mr Thx Monday, December 27, 2010 0 comments

STANDARD Chartered Plc and Bank Islam Malaysia Bhd plan to offer Shariah-compliant derivatives in Malaysia that will allow investors to hedge against interest rates and commodity prices.

Standard Chartered, the U.K. bank that earns most of its profit from emerging markets, will begin selling contracts in the first quarter that provide protection from fluctuations in the cost of items such as rice and oil, according to an e-mailed reply to questions yesterday. Bank Islam Malaysia, the country’s oldest Islamic lender, will offer swaps that allow two parties to exchange different forms of payments from an underlying asset.

The lack of such Shariah products is hindering industry growth, Badlisyah Abdul Ghani, chief executive officer of Kuala Lumpur-based CIMB Bank Islamic Bhd., said in an interview on Dec. 20. The market will be limited to hedging after derivatives contributed to the global financial crisis, which resulted in $1.8 trillion of credit losses and write downs.

“The industry has gone through a set of innovations over the past 10 years to offer Shariah-compliant solutions and today the industry can say we have Islamic derivatives,” Syed Alwi Mohd Sultan, director of origination at Standard Chartered Saadiq Bhd, the bank’s Kuala Lumpur-based Islamic banking unit, said in a telephone interview on Dec. 15. “A wide acceptance of the standards will bring greater convergence of the industry.”

Derivatives are contracts whose values are tied to assets including stocks, bonds, commodities and currencies, or events such as changes in interest rates or the weather.

Regulatory Approval

Standard Chartered started offering its commodities-based contracts in the Persian Gulf in March as the International Islamic Financial Market, a Manama, Bahrain-based agency that sets guidelines, provided standardized legal documentation for Shariah derivatives the same month. The U.K. bank will be the first to provide the products in Malaysia and is awaiting regulatory approval, according to the e-mail.

Islamic contracts can’t be traded or used as a speculative investment under Shariah law, said Aznan Hasan, assistant professor at the Kuala Lumpur-based International Islamic University of Malaysia, in an interview on Dec. 20. Standard Chartered’s products are vetted by a Shariah panel of experts to ensure compliance and that they are backed by a real underlying asset, Syed Alwi said.

“Customers need hedging instruments; if you have a customer who needs to make payment in the future for properties the company bought overseas, they have to hedge their currency,” said Aznan, who sits on several advisory boards including the one at Malaysia’s central bank.

Asia-Pacific Market

The Asia Pacific overtook North America as the biggest market for derivatives in the six months through June and accounted for 38 percent of the global total, according to data from the Washington-based Futures Industry Association published in September. That compares with North America’s 33 percent market share.

CIMB Islamic, the world’s top sukuk arranger this year, is “exploring” Shariah-compliant credit-default swaps to complement the bank’s Islamic profit-rate swaps, cross-currency swaps and cross currency profit-rate swaps, Badlisyah said.

“It’s still very early days for the market but we’ve been receiving interest for our derivatives products from institutional investors as well as companies who need to hedge their positions,” Badlisyah said. “Without effective risk management, Islamic financial institutions cannot grow in a stable and aggressive manner.”

Sukuk Returns

Malaysia, the Asian hub for Shariah-compliant finance, accounts for more than 50 per cent of the $144 billion of outstanding Islamic bonds, or sukuk, globally, according to data compiled by Bloomberg. Total sales of the securities, which pay asset returns to comply with the religion’s ban on interest, have dropped 24 per cent to $15.3 billion this year.

Shariah-compliant bonds returned 12.4 per cent in 2010, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. Debt in developing markets gained 11.7 per cent, JPMorgan Chase & Co.’s EMBI Global Diversified Index shows.

The difference between the average yield for sukuk and the London interbank offered rate shrank two basis points, or 0.02 percentage point, to 305 on Dec. 21, according to the HSBC/NASDAQ Dubai US Dollar Sukuk Index. The spread has narrowed 163 basis points this year.

Rising Demand

The yield on Malaysia’s 3.928 per cent Islamic notes due June 2015 rose two basis points to 3.10 per cent today, according to prices from Royal Bank of Scotland Group Plc. The debt has returned 5.8 per cent since it was issued in June.

The difference in yield between the Dubai Department of Finance’s 6.396 per cent sukuk due November 2014 and Malaysia’s Islamic note was little changed at 339 basis points today, according to data compiled by Bloomberg. The gap shrank 59 basis points this month.

Demand for services complying with Shariah law is increasing by about 15 per cent a year and assets will rise to $1.6 trillion by 2012, from around $1 trillion currently, according to the Kuala Lumpur-based Islamic Financial Services Board.

Bank Islam Malaysia plans to introduce new contracts that will allow an exchange of profit or return rates between two counterparties, Hizamuddin Jamalluddin, the bank’s assistant general manager, said at a seminar for Islamic derivatives on Dec. 14 in Kuala Lumpur. These will be in addition to its existing Shariah-compliant hedging contracts, he said.

Record-low borrowing costs in the U.S. may rise in 2011, providing a “timely” opportunity for banks to issue swaps- based derivatives, Hizamuddin said.

“It is very critical that holders of sukuk have access to hedging solutions that would enable them to counter the challenges in a rising interest-rate environment,” he said. “Interest rates seem to have hit rock bottom.” - Bloomberg


Posted by Mr Thx Wednesday, December 22, 2010 0 comments

Amanah Saham Bumiputera (ASB) unitholders will receive a dividend of 7.50 sen per unit for the financial year ending Dec 31, 2010 compared with 7.30 sen declared last year.

The 7.04 million unitholders who currently hold more than 82.72 billion ASB units will also receive a bonus of 1.25 sen, similar to last year.

Permodalan Nasional Bhd (PNB) Chairman Tan Sri Ahmad Sarji Abdul Hamid said the income distribution portion involved a total payout of RM5.93 billion while the bonus portion RM603.34 million.

Up to last Friday, he said, the scheme registered a gross income of RM6.58 billion.

"Dividend income from investee companies contributed RM3.27 billion or 50 per cent of the gross income, and profit from the sale of shares contributed RM2.78 billion or 42 per cent," he told a press conference here today.

He said the remaining eight per cent or RM0.53 billion was derived from investment in short-term instruments and other investments.

PNB President and Chief Executive Officer Tan Sri Hamad Kama Piah Che Othman said this year''s earnings were supported by the increase in dividend contributions from subsidiary companies particularly Malayan Banking Bhd (Maybank) which amounted to 55 sen compared with eight sen a year earlier.

Dividend contribution from Sime Darby Bhd, meanwhile, dropped to 10 sen from 20.3 sen in 2009.

"In terms of income, last year's dividend was less than 50 per cent but this year, we managed to achieve 50 per cent resulting from dividend returns from our investee companies.

"This year's performance was quite fortunate. Even though Sime Darby paid less than last year, we received a higher dividend from Maybank which had been gradually recovering," he said.

Asked on Sime Darby's performance, Hamad said: "We are always hoping that the performance of our companies will improve.

"If we look at Sime Darby's performance, they have projected the situation to get better in the future and we hope this will can help us get better returns." -- BERNAMA

Posted by Mr Thx Tuesday, December 21, 2010 0 comments

Thursday, December 16, 2010
From Bloomberg:

Visa Inc. and MasterCard Inc. plunged more than 12% in New York trading after the Federal Reserve Board proposed rules that may slash debit-card interchange fees by 90%.

The new rules, posted today by the Fed on its website, may aid retailers and cut profit for lenders who reaped about $15 billion from such charges last year. Terms outlined by the Fed include a plan with caps of 12 cents per transaction. The fees currently average about 1%.

The result could be an 80% to 90% drop in the fees that Visa and MasterCard pass on to banks, according to Tien-tsin Huang, an analyst at JPMorgan Chase & Co. Jason Kupferberg, an analyst at UBS AG, said investors had been expecting a 40% to 60% reduction.

"Visa is still reviewing the specific elements of the recommendations," said Will Valentine, a spokesman for the San Francisco-based company, in an e-mailed statement. "We cannot comment in detail on the proposed regulations until we have had a chance to fully consider their implications."

Visa fell $9.82, or 13%, to $67.12 at 3:08 p.m. in New York Stock Exchange composite trading, the most in two years. MasterCard dropped as much as 12%, its biggest one-day slide ever, before recovering to $222.04, an 11% drop.

The central bank is crafting the caps on "swipe" fees, also called interchange, to comply with financial curbs that Congress passed in July. Analysts have said the limits could erode profit for Visa and MasterCard. By contrast, the new rules may cut costs for retailers such as Wal-Mart Stores Inc. and Target Corp.

Network Choice

"Setting a cap ensures that no issuer is able to receive an interchange fee at an unreasonably high level," said Janet Yellen, Fed vice chairman, in a memo outlining the proposals.

The Fed also proposed rules that would let merchants choose from at least two independent debit networks for routing transactions, potentially creating more competition for Visa and MasterCard.

To compensate for the lost profit, banks may eliminate rewards on debit cards and charge some customers for using them, increase fees on deposit accounts and promote other products that aren't covered by the regulations, such as charge cards that require consumers to pay their bills in full each month, McDonald said.

The debit caps were part of a measure pushed by U.S. Senator Richard Durbin, an Illinois Democrat whose new rules permit retailers to refuse credit cards for purchases of less than $10 and offer discounts based on the form of payment. It exempts lenders with assets of less than $10 billion and reloadable prepaid debit cards, which are used to distribute government benefits such as Social Security.

Credit Cards

The industry has escaped attempts to regulate interchange on credit cards, which average about 2% per transaction, saying the fees are needed to compensate for the risk of lending money. Debit fees don't have that problem because cash is immediately deducted from the consumer's checking account.

The so-called Dodd-Frank financial overhaul requires the Fed, which writes regulations on electronic payments, to complete the rules by April 21 and implement them by July 21. Today's vote will open a public comment period, after which the Fed board will meet to vote on the final rules.

To contact the reporter on this story: Peter Eichenbaum in New York at

To contact the editor responsible for this story: David Scheer at

Posted by Mr Thx Friday, December 17, 2010 1 comments

The Story of the Sukus and the Tukus

gold coins

There were once two neighbouring islands far away in the oceans. One was called Aya and the other Baya. A certain people called the Sukus lived on the island of Aya . It was a fertile island with lush vegetation and tropical fruits. There were numerous waterfalls and rivers that provided the people with clean water and places for family retreats and recreation. The surrounding seas were unpolluted, with abundant fish and other seafood. The island also had gold and the Sukus, particularly the womenfolk, loved gold, They used pieces of gold as money since everyone treasured gold. Their tribal leadership led by a man named Saka, minted the gold coins. They lived a simple cooperative life and there were no interest charges for lending and borrowings among themselves. Occasionally, some tidal waves and strong winds destroy some property, particularly homes, but the community would immediately help themselves to rebuild or repair the damaged property. Other than that, it was a peaceful community of people who went about their life gracefully.

The island of Baya , on the other hand, was inhabited by a people called the Tukus. Their leader was an elderly man named Taka. The island of Baya was fertile too and the Tukus were mostly farmers who worked rice fields or kept cows, sheep and poultry. Some of them were good at handiwork and produced a variety of household items. They too lived a very peaceful and cooperative life, mutually helping each other for survival. The Tukus were, however, not so sophisticated as the Sukus, in that they merely did barter trade. The Tukus realized that the Sukus were much wealthier, healthier and had towns that were much more sophisticated than their own. They had always thought that the Sukus were more gifted and superior beings than themselves. Even though they barter traded their goods occasionally with the Sukus they never got the idea of money. However, their women-folk too loved gold, particularly the gold jewellery that the Sukus made.

One day, two smartly dressed men arrived in a ship on the shores of the island of Aya . Their names were Gago and Sago. The Sukus being a very hospitable people welcomed their new guests. Gago and Sago impressed the Sukus with the stories of their extensive traveling. They showed them some gold coins from other parts of the world and also some printed papers that were apparently used by some far-away people as money.

The Sukus had never seen paper before. The paper money even had pictures of bananas on it – their favourite fruit. The two strangers also showed them a machine that prints such money. Wow! That got the Sukus’ attention. There were awed because they had never seen anything like that before. The islanders loved Gago and Sago and invited both to live with them on the island.

Gago and Sago convinced the people that an institution called a bank would benefit the people immensely. They explained that a bank would provide a place for keeping their gold money safe while uplifting their economic conditions by making the savings available to others for productive use, which otherwise would remain idle. The Sukus, being a people who loved to help others, thought that was a great idea. Gago and Sago then built a small building structure with a vault in it and started operating the first bank on the island of Aya .

They celebrated the occasion by giving the islanders a great feast along with a colourful festival of events. The people thronged to deposit their gold coins with the bank. Depositors were given a piece of printed paper for every gold coin they deposited, with the assurance that they could redeem a gold coin for every paper they turned in. The people were excited with the paper “money” they got because it even had a picture of their leader Saka beside a banana tree. No doubt Saka was very pleased too!

The people deposited all their gold coins, a total of 100,000 pieces and hence an equivalent number of pieces of paper were given out. Now the people used the paper as money and found that it was much more convenient than the heavier gold coins that they used before. The paper money printed by Gago and Sago, therefore, became the dominant currency of the island. Nobody used the fold coins anymore. The people were pleased with the ease with which they were able go about doing their businesses. They trusted Gago and Sago very much because each time they brought in a piece of paper for redemption their request was indeed honoured. Gago and Sago became very respected and honoured in their society.

The Tukus who heard about the whole thing became excited and pleaded with Gago and Sago to help them out too. Gago and Sago smile to each other and told the Tukus that they would indeed be very pleased to do so. They then set up a similar building in Baya, and Sago was placed there as the manager. The difference between Aya and Baya was that in Baya the Tukus had no gold coins to deposit. Sago told them that was alright. He would however, give 1,000 paper notes to each family to use as money. Since they were a hundred families in Baya, so 100,000 paper notes were given out. However, Sago reminded them that at the end of the year each family must return 1,100 paper notes, the 10 per cent extra being a charge for the services he was providing. The Tukus found the paper money truly to be like magic. It made their business dealings so much easier compared to their previous barter trade. People spent much less time looking for counter parties to trade with. Now they were able to specialize in jobs they were good at. Their economy began to grow rapidly. Now Gago and Sago decided that the time was ripe for them to do their “trick”.

Gago noticed that in Aya, on average only 10 per cent of the fold deposits were redeemed by the Sukus at any particular time. The other 90 per cent remained in the vaults. Noticing that their printed papers were circulating as money, Gago printed an extra 900,000 certificates to be circulated as money too! Gago had calculated that with the extra papers, a total of 1,000,000 pieces of paper would be outstanding and if the people came to redeem their normal 10 per cent, then the 100,000 original deposit of gold coins would be readily available for redemption.3 Gago loaned out this extra 900,000 paper money to some “needy” Sukus at an interest charge of 15 per cent.

The Sukus suddenly found that the prices of things were rising. This baffled them and no one could figure out why.4 Some of them who had borrowed money form Gago were not able to pay back their debt even though they worked very hard trying to earn that extra money.5 Business became increasingly competitive and the society became less compassionate and less caring towards others than previously.6

The Tukus too found similar things happening to them. Initially, they did not notice any price increase but they noticed some behavioural change in their people. They became very competitive in their attitude and less caring towards their fellows. Even with hard work and such competitive behaviour, some of the Tukus still defaulted on their loans. They were not able to acquire enough money to pay back their total debt.7 Now Sago began to confiscate real wealth from the loan defaulters –like land, cows, sheep, etc. Their elderly leader Taka was among those who defaulted. But Sago gave him and some other Tukus additional paper notes as a rescheduling of their loans. This increased further their indebtedness. Later Taka defaulted again and had his loan rescheduled again. Now Taka began to avoid meetings with Sago. He felt ashamed and found his former power, pride, courage and dignity falling.8

On the contrary, he found that Sago was slowly becoming very wealthy by acquiring the people’s assets. In fact, he found that the power, pride, courage and dignity that he lost were now enthroned on Sago.

After a number of years, Gago and Sago who once arrived on the shores of the island of Aya with only a printing machine, were now the owners of most of the land and property in both Aya and Baya. The people were reduced to mere workers, some of them now living in poverty. Many worked long hours just to make ends meet. They now had less time for family, friends or for religious activities. Social problems were widespread.

People cared less for other. It goes without saying that with poverty, other social ills like crime, prostitution, etc. began to thrive. Their cultures were gradually replaced because Gago and Sago introduce a new “superior” culture of a “superior” people to which they belonged. This was the end of the caring and loving people of the two islands Aya and Baya, who had earlier lived a peaceful yet graceful life before Gago and Sago arrived with a printing machine.

Gago and Sago did not stop there. They continued to spread their wings to other peoples and societies. Their ultimate dream is to become the Global Supreme Rulers by establishing a single global bank with single global money.

We postulate here that in the current global monetary system, developing nations would go through somewhat similar events as pictured above.


3 This is how money is created in the current banking system in aggregate. If the reserve requirements is 10 per cent, then for a deposit of 100,000 a total loan that can be created is given by 100,000/0.10 = 1,000,000

4 This is easy to see with the help of the equation of exchange, MV = PY. In this example, with the sudden increase in the money supply M, without a corresponding increase in real output of goods and services Y, the prices levels, i.e. P thus tend to increase ( the velocity of circulation, V, is assumed unchanged and constant).

5 The loan (principle plus interest) is not repayable in aggregate because the interest portion does not exist in the form of money. Notice that the interest of 15% on the 900,000 principal equals 135,000. Therefore the total amount repayable is 1,035,000 but nonetheless, only 1,000,000 exist in total as money in the whole system. Accordingly, some defaults on the loans are sure to take place.

6 Since interest charge do not exist in the form of money, competition for money therefore ensues, reflected in increase business competition.

7 Again, this is because there is not enough money in the system as a whole such that debt is not repayable in aggregate.

8 Imagine that you borrowed RM10,000 from a friend. Do you think your behaviour toward the friend would change, say when you meet the friend in the street? Particularly when the stipulated time for the return of the loan had expired?

Credit To Prof Ahamed Kameel Mydin Meera for his book The Theft of Nations – Returning to Gold

Posted by Mr Thx Tuesday, December 14, 2010 0 comments

By Tengku Noor Shamsiah Tengku Abdullah

KUALA LUMPUR, Nov 29 (Bernama) -- The ringgit is expected to touch RM2.20 against the greenback by 2012, following the continued strengthening of the local currency, says Malaysian Investors Association (MIA) president, Datuk Dr P.H.S. Lim.

"The ringgit, together with other Asian currencies, are getting more spicy and hot caused by further financial problems in the European Union and the slow economic momentum in US," he told Bernama here Monday.

Lim said Asian gross domestic product was expected at 7.1 per cent against the global average of 4.8 per cent for 2011.

He said the US Federal Reserve was mopping up Treasury bills worth US$600 billion and at the same time, printing more new notes.

"This has made some governments to call for gold to be used as reserves and this is driving gold price to all-time high of US$1,364 per troy ounce," he said.

Lim said the US government kept presuring China to strengthen its renminbi to make Chinese goods less competitive.

However, Lim said, currency was not the only factor in production and services.

"US wages are too high, making up 60 per cent of their total production and service costs," he said, adding that trade war and currency were intertwined.

"We had seen US-Japan trade war in the 80s and history keeps repeating itself. Some countries have called for US greenback to be replaced as international currency and reserves," he said.

In fact, many central banks are placing more reserves in other currencies and gold, he said.

He said fund managers, international investors kept buying gold and hot money are chasing Asian and Brazil, Russia, India and China assets, causing inflation fear.

Lim said the EU faced another round of financial crisis and needed 440 billion euro (1euro=RM4.14) to bail out its indebted members.

The EU and the International Monetary Fund had set up a 750 billion euro fund to help Greece in May, he said.

"Now Spain is facing a possible meltdown. Some member countries are not too happy to provide additional funds to boost European financial stability.

"This situation may further drive up Asian currencies and gold prices," he said.


Posted by Mr Thx Wednesday, December 1, 2010 0 comments
Related Posts Plugin for WordPress, Blogger...

Sekapur Sirih Seulas Pinang

My photo
Alor Gajah, Melaka, Malaysia
Sharing is caring. This blog is about sharing information that available in web space. The information is related to Finance, Business & Trading.

Enter your email address:

Delivered by FeedBurner