Recent update
- What Subprime crisis?
- Kadar baru caruman KWSP
- FISCAL AND MONETARY POLICY-COMPARISON
- National Accountants Conference 2008
- Salam perkenalan..
What Subprime crisis?
November 19th, 2008 by risan11
Don Campbell, Financial Post
Published: Saturday, September 08, 2007
First, an explanation: Subprime does not mean the interest rate is below the prime lending rate. It means the borrower is below what is considered a prime candidate for a mortgage. The confusion has caused many Canadians to panic unnecessarily that the so-called subprime crisis in the United States will spread to them because their mortgage is at a floating rate below the bank’s prime lending rate.
They can relax. Canadians are not facing a subprime mortgage crisis. There, borrowers with little or no income, little or no equity and a history of not paying their bills have been handed variable-rate mortgages they cannot afford. These loans are high risk — hence, subprime — and in early 2007, one in every eight U.S. subprime loans was in default. Projections are this number will double by June, 2008.
Why would subprime lenders put themselves in this precarious position? The simple answer is they thought they had a system to mitigate their risk while still making a profit. After they got the borrower to sign on the dotted line, the lending institutions packaged up the loans and sold them to hedge funds, mutual funds and private equity groups looking for quick returns.
To make matters worse, many of the buyers of these packaged loans used borrowed funds, thus adding another layer of debt to a shaky foundation. The shares of these companies were then bought by pension funds and insurance companies looking for high returns, even though they would never have bought the risky mortgages outright.
This layer upon layer of risky debt was created to fuel one thing: short-term profits.
Over the past five years, thousands of new mortgage brokers have entered the market in Canada and the U.S. They must have thought they’d hit the jackpot. Financial institutions were willing to lend to just about anyone and were lining up to pay almost double the commissions on mortgages. At one point in Canada, it was so easy to get a mortgage that a homebuyer could just “declare” his or her income, no proof required.
Still, in Canada, the Bank Act forces lenders to be more conservative than across the border. All loans in excess of 80% of the property’s value must be insured, protecting the lender from loss. And while it is true that some Canadian lenders dramatically lowered their lending criteria, the percentage of subprime lending is substantially less than in the U.S. In mid-2007, more than 21% of U.S. mortgages were subprime compared with only 5% in Canada — all of which are insured. According to the Canadian Bankers Association, a record low number — 0.24% — of mortgages are in arrears.
The bottom line is, unlike the U.S., the Canadian housing market has not been artificially driven by bad lending practices. Our long-term fundamentals are solid: We have a growing population, energy and commodities are in high demand, personal incomes are increasing, job creation is strong, consumer confidence is high.
So, what’s the lesson in all of this? Chasing short-term returns leads to an inevitable correction in any market. - Don R. Campbell is the author of Real Estate Investing in Canada( www.reincanada.com). All royalties from his books go directly to Habitat For Humanity.
Copy from Financialpost.com
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Kadar baru caruman KWSP
November 9th, 2008 by risan11
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Kadar Caruman KWSP Pekerja Dikurangkan Mulai Gaji Januari 2009 |
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FISCAL AND MONETARY POLICY-COMPARISON
November 5th, 2008 by risan11
FISCAL AND MONETARY
POLICY - COMPARISON
Introduction
Fiscal policy should not be seen is isolation from monetary policy.
For most of the last thirty years, the operation of fiscal and monetary policy was in the hands of just one person – the Chancellor of the Exchequer. However the degree of coordination the two policies often left a lot to be desired. Even though the BoE has operational independence that allows it to set interest rates, the decisions of the Monetary Policy Committee are taken in full knowledge of the Government’s fiscal policy stance. Indeed the Treasury has a non-voting representative at MPC meetings. The government lets the MPC know of fiscal policy decisions that will appear in the annual budget.
Impact on the Composition of Output
Monetary policy is seen as something of a blunt policy instrument – affecting all sectors of the economy although in different ways and with a variable impact
Fiscal policy changes can be targeted to affect certain groups (e.g. increases in means-tested benefits for low income households, reductions in the rate of corporation tax for small-medium sized enterprises, investment allowances for businesses in certain regions)
Consider too the effects of using either monetary or fiscal policy to achieve a given increase in national income because actual GDP lies below potential GDP (i.e. there is a negative output gap)
Monetary policy expansion
Lower interest rates will lead to an increase in both consumer and fixed capital spending both of which increases current equilibrium national income. Since investment spending results in a larger capital stock, then incomes in the future will also be higher through the impact on LRAS.
Fiscal policy expansion
An expansion in fiscal policy (i.e. an increase in government spending) adds directly to AD but if financed by higher government borrowing, this may result in higher interest rates and lower investment. The net result (by adjusting the increase in G) is the same increase in current income. However, since investment spending is lower, the capital stock is lower than it would have been, so that future incomes are lower.
Differences in the Effectiveness of Monetary and Fiscal Policies
When the economy is in a recession (when business and consumer confidence is very low and perhaps where deflationary pressures are taking hold) monetary policy may be ineffective in increasing current national spending and income. The problems experienced by the Japanese in trying to stimulate their economy through a zero-interest rate policy might be mentioned here. In this case, fiscal policy might be more effective in stimulating demand. Other economists disagree – they argue that short term changes in monetary policy do impact quite quickly and strongly on consumer and business behaviour. Consider the way in which domestic demand in both the United States and the UK has responded to the interest rate cuts introduced in the wake of the terror attacks on the USA in the autumn of 2001
However, there may be factors which make fiscal policy ineffective aside from the usual crowding out phenomena. Future-oriented consumption theories hold that individuals undo government fiscal policy through changes in their own behaviour – for example, if government spending and borrowing rises, people may expect an increase in the tax burden in future years, and therefore increase their current savings in anticipation of this
Differences in the Lags of Monetary and Fiscal Policies
Monetary and fiscal policies differ in the speed with which each takes effect the time lags are variable
Monetary policy in the UK is extremely flexible (rates can be changed each month) and emergency rate changes can be made in between meetings of the MPC, whereas changes in taxation take longer to organize and implement.
Because capital investment requires planning for the future, it may take some time before decreases in interest rates are translated into increased investment spending. Typically it takes six months – twelve months or more before the effects of changes in UK monetary policy are felt.
The impact of increased government spending is felt as soon as the spending takes place and cuts in direct and indirect taxation feed through into the economy pretty quickly. However, considerable time may pass between the decision to adopt a government spending programme and its implementation. In recent years, the government has undershot on its planned spending, partly because of problems in attracting sufficient extra staff into key public services such as transport, education and health.
Evaluation: Problems with the use of active “demand-management” policies
(1) The measurement of output: Where are we in the cycle? Where are we going? How fast? Will we know when we get there? Inaccuracies in estimating the possible trade-offs in macroeconomic policy
(2) Time lags in the policy process: measurement, decision, execution and then effectiveness of policy changes
(3) What kind of fiscal policy? Spending (on what?) or tax cuts (for whom?)
(4) Will spending (fiscal policy) ‘crowd-out’ other spending, either directly or indirectly?
(5) Will changes in fiscal or monetary policy affect other economic objectives - such as the exchange rate, the trade balance and the provision of public services?
(6) Fiscal policy is weak (ineffective) when investment is very sensitive to interest rates and when consumers pierce the veil and attempt to offset the actions of the government (e.g. saving a tax cut, or increasing their saving when higher government spending leads to expectations of higher taxes in the future)
(7) Monetary policy is weak (ineffective) when consumers are willing to hold large quantities of money rather than spend them even when interest rates are very low
Copy from tutor2u.net
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National Accountants Conference 2008
October 28th, 2008 by risan11
Sesiapa y berminat sertai conference ni…untuk maklumat lanjut, klik link dibawah :
Recent corporate scandals have rocked the accountancy profession, and negatively impacted the business community. Coupled with escalating energy and commodity prices, how will Malaysia fare? And how will all these impact your business or organisation?Discover how to enhance the performance and credibility of your organisation, not only in the eyes of stakeholders but the public in general, in a responsible and professional way, at the NAC2008 – Malaysian Institute of Accountants’ MEGA EVENT for finance and business professionals and leaders in the country.
The NAC 2008, organised by the Malaysian Institute of Accountants (MIA) for the 24th successive year, is an important event in the calendar of every accountants, finance professionals, corporate executives and business leaders. With the focus of this year conference, you will gain valuable insights on how you can enhance the desired business performance and credibility for your organisation in a responsible and professional way in the face of global challenges and opportunities coming our way. NAC 2008 also provides an ideal platform for you to network with professionals and business leaders.
Benefits of attending include:At the end of the conference, you should be able to learn and get an insight on:
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Accounting latest issues and practices |
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Islamic Finance and its practices in Malaysia.
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World economy impact on Malaysia.
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Best practices of business operation.
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Personal motivation and development.
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Networking with professionals and business leaders from diverse industries.
A Must-Attend EventAccountants and all Finance Professionals, including CEOs, CFOs, GMs, Directors, Heads, Senior Managers, Managers and Executives.
16 MIA CPE Credit Hours
HRDF (Kindly apply under the SBL Scheme)
ENQUIRIESEnquiries & registration
tel 03-2279 9200
fax 03-2273 5167
email nac@mia.org.my
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Salam perkenalan..
October 8th, 2008 by risan11
Salam perkenalan semua
Baru nak berjinak2 dgn blog ni..
nanti kita jumpa lg ye..
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