How are people feeling about the economy now?

Indonesians don't see the economy as bad as it is blown up in the news. They still go on holiday, shop in malls, eat in food courts, travel out of down. Is this what is happening in Malaysia too?



Koreans feel quite positive about the economy now due to the stock index for the key companies in Korea (e.g. Samsung, LG and Hyundai) has risen and showed quite positive business result in the first half of 2009.



UK's people seem to be confused due to the conflicting message in the UK media - Things are going to get worse? Things are starting to look more positive? The recession is already over? While many become lost in negativity, there are equally many who have more positive feeling towards the economy.


Australians are caught in uncertain time which binds them into a state of inertia. In short, they don't know what to do to react to the current economy situation. Interest rates are low, services could not be better and etc. Majority of them do not expect economy upturn anytime soon.


Americans have overwhelming feeling of uncertainty and it is unclear what the next is. No one thinks the economy is getting better. 5% of Americans say they're undecided on economy's direction. 13% of Americans say the economy is staying the same. 82% of Americans say the economy is getting worse.


Malaysians are optimistic about the economy. They feel secure, they make plans for the future, they get married, they buy cars and houses, they grow their wealth with stocks, bonds and unit trust. 58% of Malaysians think the economy will get better quickly. Based on my personal experiences (since I'm Malaysian), more than 70% of people around me buying new house and new car. So, are we really optimistic about the economy now?


Summary
As you can see people from Asia are generally optimistic about the economy situation now as compared to American and European. What is your opinion on this?

Source: www.synovate.com

Posts that you may interested:

• Are you ready in 21'st century?
• Should I go for property tax deduction incentive?
• What is subprime crisis?
• How economy works?
  

Are You Ready in 21st Century? Speak Chinese?

19th century belonged to England, 20th century belonged to United State, and 21st century belongs to China. Do you agree?

When I was first graduated around 10 years ago, I were not required at all to deal with China people and today it is almost like day-to-day activities that I have to deal with China folks. It happens to almost anyone around the world. Whether you're from Asia, Europe or U.S, I bet you're some how cannot run away from dealing China. Is that true?

I like the following quote from Jim Roger (i.e. he is an U.S. economist who currently stay in Singapore) who strongly believe that Asia has a strong potential.

"If you were smart in 1807 you moved to London, if you were smart in 1907 you moved to New York City, and if you are smart in 2007 you move to Asia."

I know some of us (probably some of the economist as well) are still denying the fact (maybe not the fact yet to you?) that 21st Century belongs to China. But by the time you realize, will it be too late already? See the following interview of Jim Roger:



The question is are we ready? Have you prepared yourself in 21st century? A very obvious answer is to prepare yourself is to “Learn Chinese”. Therefore, you can see the following trend which is happening today:

• Not so smart people at least send their kids to Chinese school because they think they are probably too old to learn a new language.

• Smarter people take initiative to learn Chinese by themselves no matter how hard the language is.

• Very smart people marry Chinese people to fasten their learning process. That's why you see a lot of western people love Asia's girls. Hahaha... perhaps this not really their intention?

So, how about you? Are you ready in 21st century? We used to proud of speaking English and now we're proud of speaking Mandarin, are we? At least few of my friends in State, they really proud of speaking Chinese and feel really exciting when they learn new words everyday.

Waive Late Credit Card Payment Fees and Charges

Do you aware that we can actually waive the credit card late payment charges? I wasn't aware of this until one day the bank officer called me to remind me that my credit card payment was due. So, I just simply tried my luck and asked him:

Me: I have no idea the payment was due because I have not received any credit card statement in my letter box. Is there a way I can waive my penalty fees?

Bank Officer: Yes, you can waive the credit card late payment fees. Once you receive the statement, you can just give us a call to waive it.

Wow! What a surprise? I think I have been all the while paying these fees due to the following careless reasons:

1. Forgot to make payment on time.
2. Never received the credit card statement.
3. Pay the wrong amount – less than the actual amount that I should pay.

Steps to Waive Your Credit Card Late Payment Charges

1. Once you receive the statement, give them a call. The phone number is usually at the back of your credit card if you're not aware of it.
2. Tell them that you want to waive your late payment charges. If they don't allow, tell them that you're going to use other credit cards and would like to cancel this credit card.

I think they will only do this only if you have good track record and I'm using the HSBC credit card. I believe other banks should the same as well or else you can just tell them you would like to cancel the card. Hope this helps. :)

Related Posts:

• Waive Credit Card Annual Fees
• Use Credit Cards Wisely

p/s: I wonder if I should call them to waive those charges and fees that I have paid in few months back. Maybe I should?

What Determines the Value of Money?

We invented the money as medium of exchange but how are we going to determine the value of money? What do we mean by $1? What do we mean by $100? Who is in charge of determines the value of money?

The value of money has really no meaning at all until we know what is the capability or we call it purchasing power. Technically speaking, only goods or services has value and whether how much the goods or services are worth to you are very subjective from one person to another. Eventually, it is still back to the basic fundamental of economy, supply & demand to determine the value of the goods or services. Let's look at some history how we determine the value of the money...


Very Brief History of Money

Before paper money was introduced, money used to have its value when gold was still used as money (e.g. coins that made by gold). Then later the paper money was introduced to represent the gold. Thus, the Gold Standard Act was introduced, let's say $100 represent 1 ounce of gold. Having $100 is equivalent having 1 ounce of gold. You can basically exchange your $100 with 1 ounce of gold anytime as you wish. This is what it means by “Money is Backed By Gold”. So at that point in time, the value of money is determined by how many the gold you have.

The gold standard was then lasted until 1971 when “Fiat Money” was introduced. The key concept of “Fiat Money” system is money is no longer backed by any commodity (i.e. gold). This is the system that we're still using until today and it is totally based on our confident on the money itself. In other words, the value of money is now determined by your perception, impression or confidence on it. As long as WE THINK, how much money is worth, the money will worth that much. Of course, the “WE” here is not you and me but “EVERYONE” in the globe.


Simple Version (I hope) of Money History

1. Everyone used gold as money (i.e. medium of exchange).
2. Bank came out a standard way to represent the gold (i.e. coins)
3. Coins too heavy to carry around, bank introduced paper money to represent gold (i.e gold standard).
4. Later on, we all confused with this piece of paper is valuable. We forgot that the paper money has value because it is backed by gold. We all started to love money...
5. Bank created more paper money to satisfy our needs even without the actual gold they have.
6. Sooner or later, money was no longer backed by the actual gold. “Fiat Monetary” is born.
7. “Fiat Monetary System” works until today which means the money now gains its value through our impression and perception.

Summary

Money in fact is a very complex topic and until today I'm still learning a very basic question of money: What is money? How money works? I try my best to make it as simple as possible.

To summarize this in few words, the value of money was used to determined by actual gold. However until now, the value of money is getting more complex in a sense that it no longer tights to gold but our impression or perception toward the money. That's why according to economist, only 8% of the world's currency exists as physical cash.

P/S: I talked about perceptive reality few years back and now this topic kind of links it back although my original intention has nothing to do with money. Think of it again, can I say the value of money is perceptive reality?

What is Money and Why It was Created?

In my previous post - simple way to explain the economy, I clearly explained that why people want to trade not only for the benefit of 2 parties but SYNERGY. So, no way we can stop trading. Because of trading, economy exists and so does the money was created too.

A lot of people in fact has already forgotten or have no idea of what money is and why it was created? These are the 2 top answers that I get when I throw the questions out:

1. Money is just a piece of paper.
2. Money was created to make you rich.

I combine these 2 statements and it becomes:

• Money is just a piece of paper to make you rich!

It sounds like money is magic because it is paper that can make you rich. Wow! Don’t you think so? But, are these answers correct? In some ways, perhaps yes?


What is Money?

Money is an agreement by everyone of us to be used as a medium of exchange. If you would like to use stone as your medium of exchange, then you can call the stone as money. Of course if you want to use a piece of papers as your medium of exchange, you can call this piece of paper as money. It was all started with stones, then gold, follows with coins and finally papers. But, why we want this medium of exchange?


Why Money Was Created?

The most direct precise simple answer is – money was created to make our life easier for the following reasons (that I can think of):

• Goods are too Heavy - If I want to trade my cow with your chickens, I need to bring along my cow to you and carry your chickens back. Therefore, money was created to solve this. E.g. I just need to carry a stone instead of cow to make a trade.
  

• Lack for Transferability - I have cow and you have chickens but you don’t want my cow and you want ducks. Then I need to look for people who have ducks that want my cow and exchange with them. Then, I only can use the ducks to exchange with your chickens. It goes very complicated when we involve more and more people. E.g. What if the one who has ducks wants only exchange with goats? So giving all this complication, a medium of exchange is defined which is called money.

• Difficult to Divide - I have 1 cow and I want to exchange 10 chickens with you but the fact that you only have 4 chickens. On the other I want to have ducks as well but the one has ducks agrees only to exchange 7 of his ducks with 1 cow. How can I chop my cow to both you? It is difficult or troublesome to divide my cow. So, a medium of exchange is later invented.
  

To summarize all these, instead of saying money is a piece of paper to make you rich, technically speaking to be more precise - money is an agreement that everyone agrees to be used as a medium of exchange to make your life easier.

P/S: You may also want to read the Financial Big Bang Theory by Michael which I find it quite interesting on how the money was all started. I also like when he described the stranger house as bank.

Having said that, I don’t really sure if I agree when he mentioned the money is born due to the inconsistent trading. Can't we still define or standardize the trading agreement even without money existence?

I think money is born because the goods are too heavy (we don't want to carry them around) and trading with goods (i.e. technical term is known as barter trading) is lack of transferability and ability to divide.

Simple Way to Explain How Economy Works

I read this example from one of the economy book that I think it is the best example to explain how economy works as in general. The economy itself is very complex because it involves many people. What if I simplify the world to only 2 people with only 2 goods? Then, it makes this complex world way easier to be understood.

Classic Economy is Win-Win (1+1=2)

Assuming there are only 2 people in this world – farmer and rancher. Of course if farmer can only produce potatoes and rancher can only produce meat, it is obviously they can exchange their goods for the benefits each others. When they start exchanging, this is called trading. They start trading for the purpose of mutual benefit - this is called WIN-WIN.

Modern Economy is Synergy (1+1 >=3)

Let’s make this a little bit complicated that farmer and rancher can produce both meat and potatoes. Even though farmer specialty is to produce potatoes, Rancher can somehow still produce more meat and potatoes than the farmer.

Let’s look at the table below to understand the capability of these 2 guys can produce meat and potatoes in 8 hours:

	Meat	Potatoes	Comment
Farmer	8 oz	32 oz	Farmer’s capability to produce meat and potatoes in 8 hours.
Rancher	24 oz	48 oz	Rancher’s capability to produce meat and potatoes in 8 hours.

In order to enjoy both meat and potatoes:

• Farmer takes 4 hours to produce 4 ounces (i.e 8 oz /2) of meat and another 4 hours to produce 16 (i.e. 32 oz / 2) ounces of potatoes
• Rancher takes 4 hours to produce 12 ounces (i.e 24 oz /2)of meat and another 4 hours to produce 24 ounces (i.e 48 oz /2)of potatoes

As you can see, Rancher produces more meat and more potatoes than farmer. Now the question is:

• Should the rancher continue to trade or exchange goods with farmer?

Obviously no, right? However, Rancher thinks of a way to benefit to both of them to enjoy more meat and more potatoes. How does that possible? Let’s look at the conversation below:

Rancher: Hey farmer! Why you do something that you’re not good at?

Farmer: I want to enjoy the meat as well, I have to.

Rancher: I have an idea for both of us to enjoy more meat and more potatoes than we are producing now.

Farmer: Are you kidding? Don’t bluff me…

Rancher: No bluffing… listen carefully. Why don’t you 100% focus on producing potatoes and you exchange the potatoes with my meat?

Farmer: You must be insane! I got to work. Don’t talk non-sense to me anymore.

Rancher: Wait wait… If you’re doing full time producing potatoes, you can get 32 ounces of potatoes right? If you give me 15 of those 32 ounces, I’ll give you 5 ounces of meat in return. So now, you have 17 (i.e. 32 – 15) ounces of potatoes and 5 ounces. See? Now you enjoy 1 extra ounce of potatoes and 1 extra ounce of meat? Amazing, isn’t it?

Farmer: That’s sounds great. Why the hell you want to do that? If I enjoy more, then you must be enjoying less.

Rancher: No, not really. I enjoy MORE as well. See, I spend 6 hours to produce 18 (i.e. 24 oz / 8 hours X 6 hours) ounce of meat and spend 2 hours to produce 12 (i.e. 48 oz / 8 hours X 2 hours) ounces of potatoes. I exchange 5 ounces of meat with 32 ounces of potatoes that you have. So now I have 13 (i.e. 18 – 5) ounces of meat and 27 (i.e. 12 oz + 15 oz) ounces of potatoes. You see? I get extra 1 ounce of meat and extra 3 ounce of potatoes.

Farmer: Wow! This is so cool! But how does that work? I’m confused.

Rancher: That is MAGIC! :D

Summary of the Conversation

Perhaps you’re also confused with the conversation. Let’s look the gain from trade table below to understand the confusion:

Without Trading Gain (Farmer & Rancher work independently)

	Meat	Potatoes	Comment
Farmer	4 oz	16 oz	Farmer splits the 4 hours to produce 4 oz of meat and another 4 hours to produce 16 oz of potatoes.
Rancher	12 oz	24 oz	Rancher splits the 4 hours to produce 12 oz of meat and another 4 hours to produce 24 oz of potatoes.

With Trading Gain (Farmer & Rancher Start Trading)

	Meat	Gain from Trade	Potatoes	Gain from Trade	Comment
Farmer	5 oz	+ 1 oz	17 oz (32 – 15)	+ 1 oz	Farmer 100% focus to produce 32 oz of potatoes and exchange 15 oz of potatoes with 5 oz of meat.
Rancher	13 oz (18 – 5)	+ 1 oz	27 oz (12 + 15)	+ 3 oz	Rancher spends 6 hours to produce 18 oz of meat and spends 2 hours to produce 12 oz of potatoes.

Conclusion

Economy is everything about producing goods or services, exchanging goods or services or simply called trading.

• Classic economy is trading with the win-win benefits.
• Modern economy is trading with the achieving synergy in both parties.

In synergy, 1+1 >= 3 which seems to be impossible but it is proven possible with the example above. No trick, it is real! Amazing isn’t it? Imagine if the trading now is involving more than just simply 2 person, can you see how complex the Economy is? Can you see why no one can predict the economy?

P/S: As you can see, the very original reason we trade is for synergy or at least win-win? Now, what is your reason to trade? You just want to Win! But, are you winning?

By the way, you may also interested to read the Simple Way to Explain Subprime Crisis.

Shall I travel during this H1N1 (Swine Flu) outbreak?

Time flies and I’m going to travel to Europe again in this coming Friday. The last trip I only stayed in Ireland for 3 weeks and this round I’m going to travel outside of Ireland for about 2.5 weeks.

The countries that I going to visit are:

• United Kingdom (London) – Travel by Air and Car.
• France (Paris) – Travel by Air and Train
• Scandinavia (Norway, Denmark, Sweden) – Travel by Air and Train

Yes, I decided to travel during this H1N1 (Swine Flu) outbreak because:

• Visiting these countries is probably my last chance that I have in my entire life.
• Influenza A - H1N1 (Swine Flu) is not really a deathly disease.
• WHO says travelling is safe! :) Really?
• I believe I have strong immune system. :D
• I will eat a lot of fruits, vegetable to build up my immune system before and during the trip.
• I will keep my good hygiene and avoiding touch my month and nose.
• What else?

As you can see, a very cute thing about human is:

• We all like to make a decision first then only we look a reason or excuse why we make such decision.

This is another good example to demonstrate this. A lot of decision we had already made a choice that we’re just looking for reasons or justifications. Have you experienced this by yourself?

So, you may come to this blog by searching the net and looking for an answer but the fact that you had already made a choice. Don’t you think so?

P/S: Okay, see you guys and I'm going to travel in 5 more days. I probably won’t be blogging for a while - thinking to completely run away from work and laptop (still thinking whether I should bring laptop). I hope this won't be my last post though. :D All the best to all of you!