BC & EC

As I was having doing my data simulation on private capital inflows yesterday, I got an email from a friend with a title/ subject of And the global economic has crashed….

The big blow in the stock market on previous Monday created Wall Street to a mess* and $700 billion bailout failed to pass in the Congress worsened the situation. And the market crashed…..

Three days ago an amateur Economists discussion was done in the class whether we will have another recession. Yup, the crisis may give impact to Malaysia's economy. It didn’t surprise me much as it is a normal business cycle. I remembered went to Prof J’s seminar class during my second degree ( Prof. J is a famous professor in Economics and now working with National University of Singapore). He told that the cycle pattern of the recession in Malaysia is about 10 to 12 years (1972/73, 1985, 1997/98). The last recession was in 1997/98 and now it is 2008. +- 10 years cycle is not a really important matter as it can be predictable but the cause and effect of the crisis will be much concern. Now we have to talk about a Global Crisis here. It was highlighted as worse as great depression in 1920. 1997/98 Asian Crisis seems to be a picnic compared to the current situation and it is said that even good companies will fail. Zero liquidity.

Everyone may caught up with the financial turmoil especially those with the international companies and wondering how its going to impact them. I hope none of us will badly affected with this. Personally, I just want the economy to be back to normal ( so that I can study in peace and my friends who study overseas won’t worry very much whether the government have enough money to pay for their scholarships) but that $700 billion bailout in US is also very big...

What you could do with $700,000,000,000 (This is taken from TIME magazine)

1. Give every person in the U.S $2300 or give every household $6200

2. Pay the income taxes of every American who makes $500,000 or less a year

3. Fully fund the Defense Treasury, Education, State veterans Affairs and interior department next year

4. Buy gasoline for every car in US for 16 months

5. Buy every NFL, NBA and Major league Baseball team and build each one a new stadium and pay your players $191 million a piece for a year

6. Create the 17^th largest economy in the world – roughly equal to that of the Netherlands

*BC - Business Cycle

EC - Economic crisis