October 6, 2008

Appetite for Destruction

I am not an economist, an analyst or even a lawyer who advice banks how to close million dollar transactions. I am not even a stock player, unless you call owning ASB as stock trading. I have never has an amount larger than RM1,000-00 in my wallet and no more than RM10,000-00 in my bank account at any one time, other than the time my personal loans had just been approved where it ballooned, albeit very momentarily to just below RM50,000-00. My firm just do real estate and banking with corporate work for SMEs once in a while. Oh, and intellectual property. We would like to be known more as a boutique firm, more than anything. Hell, my staff knows each of their files by heart...We would like to keep it that way

Client's money? Now that's another matter. I only handle clients money with velvet gloves. Trust me, I'm a lawyer, after all....

The preamble above is a prelude to what I am going to madly raving about next. I am mad about the way people keep bailing big business, whether it was done in Malaysia ten years ago or just last week in good old Unites States of America. It was done by Presidents, Congresses, Parliaments, Prime Ministers and every institutions or power who holds the fate of millions in their hands. USD700 Billion. How much is that? Enough to buy a country? Enough to feed all the poor? Enough to make one rich in 40 lifetimes? It seems that its not even enough to save those who needs saving. They say they may need another USD500 Billion to really save the "Wall Street". Come on...

Just one question "Why did they do it?". Why did they give loans to those who didn't deserves it and why did they then sell the loan many time over? Are they dumb? Are they daft? It seems that they are not. They are the smart ones and they are still the one laughing all the way to the banks after the bailout.Didn't all this starts with appetite? They say to the Main Street guy like me that you need to know your risk appetite before you invest your hard-earn money. This is for those who are new in investing. The basic idea is the higher the risk, the higher the return. Now, do you know what the economist say that can save Malaysia in these trying time? That's right. Appetite again, but a different type of appetite called 'local consumption'. You eat what you sow. Basically, those things that you have been exporting to other country, you eat it for yourself.

I never believe in what banks do, whether they are doing it under the banner of 'Islamic banking' or just plain banking although they are the one who help me be where I am today. Nobody ever lend someone something for free. Ask anyone. Ask Tony Fernandes or Tengku Zafrul who happens to be in my FB friends list. In Islam its called upah or wages when you got paid for what you do. There is musyarakah and mudarabah or profit sharing if you give money to someone to work it for you then you share the profit. They says that this are the basis of Islamic banking (though not all use it). But what is work to a banker? Is it real economy? To me real economy is when I see sweat runs down someone's forehead. A doctor who saves lives. A salesman who sells things. A restauranteur who cooks or manage a restaurant. A CEO who runs the business which deals in tradings. Those who receive payments for services well done. When money exchange hands for something I can see with my own eyes, then that is real economy. The financial system? Most of it deals in false economy. Do you even know where your money goes when you buy a financial stock? Economy made by a drop of a hat. Promises. Mostly undelivered.

I was brought up by a lady who owns lands and a landscaping business. She has gain 1000% of profit on lands that she bought 30 years ago. She sweated and toiled under the sun to ensure her sons, the three of us, has a bailout if we ever need one (our education was funded by my parents being Felda officers). We have received many bailouts. Some in forms of loans and some as gifts. However, one of my many arguments with my mom is the need for us to feel failure. My eldest brother is the bravest of the three of us. He has decided to NOT receive any more bailouts. He had tried his hand in IT business but failed and joined my mom for a while before falling out. Since 2005, he has been working with a company doing IT consultant. But, being my mom, she still gives it via the grandchildren.

I am NOT asking to fail. I am just saying that failure is needed to understand success. I and my partner starts in a 500 square feet office with us as our own staff. We were so broke that I slept in the office to cut my cost of living. I know how it felt to be down on your luck. I am still not that rich yet. I can't afford to NOT go to office although I can come and go anytime I want. My point is with all this rambling, bailout is for wimps. Let the big businesses fail, then let the economy fail. Then you build it back brick by brick and you will understand the need to be prudent in every business that you do. It does not solve any problem. It will create more problems. Banks are not gods. They are nothing without the person who really do real work. They are opportunist and always will be. Go back to the real economy. Where you have to work for every penny or every sen. Where the word 'appetite' refers to getting food on the table for your family.

What say you?

1 comment:

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