Merry X'mas & Happy New Year 2009

HO! HO! HO! Merry Christmas!

Christmas is celebrated throughout the Christian population, but is also celebrated by many non-Christians as a cultural festival. The jolly old man, Santa Claus is believed to be the joy giver who drops gifts and pleasant surprises into the Christmas socks.

I wish that Santa can revive the adverse economy situation

Many different reports about the current economy crisis are made available on the internet and newspapers these days. Most of us believe that the collapse of the US mortgage market and the reversal of the housing boom in other industrialized economies have had a ripple effect around the world. Some financial products and instruments have become so complex and twisted, that as things start to unravel, trust in the whole system started to fail. Others have been bought out by their competition at low prices and in other cases, the government of the wealthiest nations such as US and Europe have resorted to extensive bail-out and rescue packages for the remaining large banks and financial institutions.

Despite the constant reaffirming from our DPM Dato' Sri Mohd Najib Tun Abdul Razak who is also the Finance Minister, that the government is confident of our country’s economic fundamentals and the resilience of our financial sector, many have felt the impact of the financial meltdown more intense than before.

Our government’s RM7bil economic stimulus package with the aim to boost the overall sentiments of many sectors have not seen to have spark of hope to speed up the domestic consumption, let alone our international trades. The KLSE has touched below the 850 mark along with its technical chart clearly showing a serious bearish trend following the crash in the global stock market recently.

How does this impact us and what are the chain effects?

• Loss cutting is an instant measure to minimize risks and further losses
Many mega plans and investments have to be halted to allow for better cash flow even if it is a major loss to the organization. Loss cutting is the immediate measure in most case scenarios by many big organizations in order to protect the viability of its cash cow units.

• Reduced production
Time will be worsened as many manufacturers have felt the drop in new orders recently. Most manufacturers would have built up their orders or stocks months ahead before the financial tsunami. However, scarce demand for most of the commodities and products in the near future may give a good indication if production plans need to be reviewed. This goes the same to our import and export businesses.

• Weaker consumer purchasing power as cautious spending is advisable
While the mega projects have been halted, the mega sales are on everywhere! If you were to take a stroll down the busy walking streets in most of the busy towns or shopping complexes in Malaysia, you would realize that figures such as 20%, 50%, 70% etc and words such as “Sale” and “Buy 1 Free 1” form a common Christmas décor in the retail outlets this year.

• Default payments and higher debts
More people may find it tough to serve their loans or to repay their outstanding amounts due from their credit cards because of the shrinkage in their income that was not estimated or planned at the time of borrowing or spending.

• The high and mighty attitude has to be changed if you are seeking for a job
As the profit figures shrink in most organizations, it is inevitable that unemployment rate picks up on its own. Many retrenched Malaysian workers in the foreign lands are forced to seek for employment back in their homeland. We see a reverse trend from an employees’ market to an employers’ market lately with more fresh graduates reported to remain unemployed. This scenario has forced many job seekers to accept a lower pay or to seek alternative options in order to fulfill their financial commitments.

• Social Problems Eventually
It is very natural that high unemployment rate may lead to a hike in the crime rate. One would be lucky to secure a job with a steady income but the others may have to resort to taking short cut to survive.

What should we do?

The above are only few examples of current situation facing by most organizations and individuals. No market analyst could firmly predict for tomorrow, let alone a normal politician. I can only share my one cent worth of opinions here with the community I am serving.

• Stay away from “GREED”
It is important that we recognize the time is bad. The quickest and most effective way to react in this bad time is to spend wisely. Avoid getting in touch with “GREED” and never invest blindly. Be selective with investment options.

• Cash flow control and belt tightening
Nothing is more important than cash nowadays.

Bosses may have to start using the money kept in reserve for unexpected events while individuals may have to touch the bank savings more often than before. Therefore, it is important that we take care of our expense account.

• Be united and set our priority right for the benefit of the whole nation
Malaysians should be united to fight against our biggest enemy now - Economy Crisis!

Learn from the problems of our neighboring country, e.g. Bangkok. Political instability deters investors from investing. It is the responsibility of all Malaysians to combat this situation together with the government. As long as we walk together hand in hand without siphoning off our resources in order to fight and wrest control from one another like what has happened in Sept 2008, we should be able to walk through this crisis safely.

• Be Positive and Be Realistic
Always stay positive and don’t cry over spilled milk. This is one of the rare times that we are facing life challenges especially to the breadwinners of families and bosses of companies. Be cool and calm when dealing with financial matters. Don’t let “Mr. Stress” boss you around. Remember to take control of your own situation by understanding the fact that this is a crisis and it is hitting everybody.

I wish you all a wonderful holiday and may Santa Claus brings pleasant surprises to every family this Christmas. Merry Christmas and happy New Year 2009!