photo by shamshahrin

Articles like this scare the hell out of me. Malaysia has a growing issue on it’s hands in part because the government is still saying, “No problemo“. Unless there are genius’ at work the likes of no where else in the World, Malaysia has some painful realizations to come to grips with over the next few months.

Where the discussion isn’t going, at least in public, (or the PR level), is the possibility that the first foreign policy crisis the administration will face will be the complete economic collapse of a large, unstable nation. To be sure, Pakistan is nearly broke, and U.S. policy makers seem to be aware of that; but a worldwide demand crisis could lead to social unrest in countries like Indonesia and Malaysia, Singapore, the Ukraine, Japan, Turkey or Egypt (which is facing an internal political crisis of epic proportions already). The U.S. won’t have the resources to, say, engineer the rescue of the peso again, or intervene in Asia as in 1997.

A close friend of mine organizing funding for a mobile device startup recently had dinner with banker here and told him that many manufacturers in the country have cut back to 2 days of operation. The next shoe to drop locally is massive defaulting on credit and car loans according to this banker.

Malaysia and other countries facing a financial crisis need to rewrite home and auto loans based on current valuation rather than going into the same default and foreclosure spiral as the US and Europe. A link house in Bandar Sri Damansara was 285k RM in 2002. Earlier this year the same property was asking 520K RM. I anticipate correction in the area of 30 to 40% over the next year. Basically if your property doubled in value over the last few years, get ready for a big correction.

Malaysia has been lucky to have experienced good times for a long while. I’m scared what the reaction would be here if people are holding property loans at twice the amount of the homes current value. Then consider a collapse in the job market along with b.a.d. inflation. Then add government with weak leadership that continues to deny there is a problem.

Scary times folks.

• Malaysia is in recession
• Peter Schiff predicts US economic collapse 2 years back

After spending a few years in Malaysia, whenever you hear top level ministers and the Prime Minister repeatedly declare that things are not that bad, things are actually bad. I’ve talked to shop keepers, hand phone dealers, car salesmen & real estate agents. They already know what the government is afraid to say, Malaysia is indeed in recession.

KUALA LUMPUR: The global economic slowdown is beginning to take a toll on the lifestyle of Malaysians in Kuala Lumpur and people are bracing themselves for difficult times. A member of the public said: “What I heard around in the market… even they are saying things are more expensive. They are buying less, going to supermarket less and business is slowing down a bit.” Another said: “I have cut down a lot on lifestyle expenses.”

I’ve noticed over the past several years the increasing trend of banks handing out packs of 3 and 4 credit cards to just about anyone. Retailers here have schemes whereby people can purchase appliances, computers and such for zero interest for the first 12 months, quite popular with consumers. The real economic danger here will be when people begin to mass default on credit debt.

via Channel News Asia

• Malaysians are horny buggers
• New Zealand in recession

I hope Schiff is not right this time.

The sad reality is that we borrowed and spent our way into this crisis, and we are not going to borrow and spend our way out of it. Legitimate credit can only be supplied if there are genuine savings to finance it. Savings can’t be magically concocted into existence by a printing press, but can only be created by consumers who spend less than they earn. Efforts to fool the market will not work and will ultimately lead to a monetary disaster and runaway inflation.

• Social unrest possible in Malaysia due to economic collapse
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• Ja Können Wir – People of the World. Yes We Can.

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Last year we visited Auckland for 2 months to get an idea of what it would be like to live there. Both my wife and I have family in New Zealand and we’re giving it serious consideration. During our ‘07 holiday visit I checked in with my brother in law about the local real estate market. He’s invested in several properties in the Auckland area, has done real estate training and is a sharp guy. I asked him if he felt home prices in New Zealand would be dropping like they were back in the US. His reply was that the NZ real estate market was well insulated from the US economy and that he felt prices would continue to rise. I’m a guest in his home, his country.. who am I to argue?

I’m no expert but I saw this coming 2 years ago from the growing stream of news on blogs and on social bookmarking sites like Reddit / Digg. That’s knowledge of the crowd for you. No one in social media is surprised by the financial collapse. What happens in banking in one country affects banks and overseas. These are international companies. When Lehman Brothers fails in New York, it also fails in London, Hong Kong and Auckland.

While taking public transportation around Auckland I’d talk to the bus drivers about areas they considered to be hot markets for buying homes. Who better really? One of the bus drivers told me she and her husband were getting ready to buy a home. I told her about the coming sub-prime fallout and that she might want to wait a year. I might be getting a warm NZ hug the next time I ride her bus.

With huge projects failing and housing markets reaching 26 year lows, the NZ economy is in recession.

New Zealand is a fantastic country and has excellent investment value. Prices will come back eventually and our long term plans still include NZ. Especially if Obama should lose this election – NZ here we come! Recession or not.

• Malaysia is in recession
• Social unrest possible in Malaysia due to economic collapse

The Saudis have long memories and recall how high prices can cut into consumption; it happened in the 1980s and it’s happening again now. Any threat to oil’s leading role as a source of energy is a big worry for a country that sits on reserves of some 260 billion barrels. “We are concerned about the permanent destruction of demand,” says a senior Saudi official. “Those who buy hybrid vehicles are not going back to SUVs.”

via Businessweek

• Honda Insight, most affordable hybrid
• Fuel prices driving ecommerce

This makes sense. Why not fire up the notebook instead of gassing up the car for a trip to the mini mall?

Research firm eMarketer has some good news for online retailers: high gas prices are fueling more Web shopping. In a July 25 report senior analyst Jeffrey Grau points to several consumer polls showing more shoppers are opting to spend online and save at the pump.

In a June survey, Nielsen found that 11% of US consumers are shopping more online as the result of gas prices. The poll mirrors reports of declining foot traffic at retail stores. “For the first time, I am seeing consumer surveys in which saving money on gas prices is actually a reason given for moving shopping from stores to the Internet,” says Grau.

The article goes on to say that the hit fuel prices are putting on the economy is doing more harm than good to online retailers. I’d venture that as the economy gets better many of the shoppers might stick to buying online if they have a good experiences.

via BusinessWeek

• Top 10 lists about blogging lists
• New Zealand in recession

I’m of the opinion that next (or two) year will be a better to buy. This banking mess is just getting started.

Tom Vanderwell @ Infectious Greed posts on 7 important things to consider when buying a home now.

For condensed reading.

1. 6 months ago is ancient history.
2. Don’t worry so much about what you paid for your house.
   
3. Now is not the time for do-it-yourselfers.
   
4. Any interest rate that starts with a 6 is a good number.
   
5. There is a Tangible Difference in working with a true mortgage professional.
   
6. Don’t buy a house today if you aren’t going to stay there at least 7 years.
   
7. It’s a really is a good time to buy a house.

via Infectious Greed

• Gas stations to be obsolete?
• Proof TMNet is cheating you

I came across this at The Future of Media. Apparently elevated fuel prices have sent more people into the carpool lane. That’s a good thing. I also notice that portion sizes have reduced here in Malaysian food stalls as well. Maybe the increased fuel costs are good for the environment and our health?

PickupPal is a global service allowing passengers and drivers to choose one another based on user profiles and feedback ratings from previous trips.

Carpool, a facebook application created by the carpool community Zimride, allows you to find friends going in the same direction.

NuRide offers rewards to carpoolers from local and national sponsors hoping to generate reductions in driving and emissions.

GoLoco vows to evolve your social community into your very own public transportation network by putting your cars, friends, colleagues trips, and expenses together in one place.

Erideshare.com is a popular site with a large user base currently showing close to 18,000,000 local commuter listings and over 6,000 cross country listings.

photo by joeventures

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