I was taken aback by Tun Dr. Mahathir views on the Malaysian ambition to achieve high income economy. A very thoughtful message that makes me want to share more about this issue on my essay.
High income is easily defined as higher salary gained per worker. This not means that a janitor should pay more from what they are currently obtained, but more towards the specialize industries with specialize skills and qualification. This so-called professional will eventually representing the statistic to achieve a high income nation and flourish the economy.
This ambition is not just an ambition anymore as Malaysian government has made several programs and plans to stimulate this idea. By creating more mega projects where locals can participate, attracting FDI to Malaysia to invest into Malaysia as it will offered more professional Malaysian to work, et cetera. The number of degree holders in Malaysia are also increasing, whereby most corporate sectors and companies need this professional labor force.
But, when Malaysia has achieved a high income nation status, the so-called current cost of living will eventually altered. No more the old days price and inflation are the subject that can't be pushed away.
Inflation happened. Every years, and the most healthy increment rate will be at 2-5% per year. We can look back to the time when we were a little kid, the price of the goods that we use to pay are not the same price anymore. Like my late Granpa told me, on his day, a 5cent (Malaysian currency) are sufficient for a bowl of noodle and a loaf of bread. Yes, it is the old days. But this is how the inflation effect. We seems not realizing the increment as we all has improve our way of life and improve our living standard.
So does having a high income nation status means nothing to the Malaysian? (Technically Yes)
Having a high salary community doesn't means the spending power is increasing? The prices of products and services are also follow the hike, so how does this phenomena happened? and how to minimize the effect?
Merchant, businessman, service provider are all opportunist. When the level of affordability has risen, so does the price will be. We can't avoid it unless a strict intervention from government who will govern the ceiling price for each products and services. This approach is merely impossible and difficult to implement. After all, we must accept inflation.
But there's a way to minimize this effect. And this role are played by the government. A strict regulation on prices of product and service will be a priority in this case, a lowering tax from what are currently imposed to the vendors to ease the probability and reasons for them to increase the price, allocating a fraction of nation wealth to subsidize the cost of raw material, and educating citizen and promoting local made products and services.
A high income economic and nation are good in a sense it can promote Malaysia to another level of perception, but bear in mind that inflation is always following us. No matter how hard we steer the wheel of economic, inflation is up there to catch us. Let's Tan Sri Zati Aziz do her best to curb this phenomena
Wednesday, October 27, 2010
Why Rich People Living On Tent?
Re-post essay from Wealth Daily
Why Rich People are Living in Tents
By Brian Hicks | Wednesday, October 27th, 2010
This week is “Winter Awareness Week” in North Dakota.
Some of the precautions the North Dakota Department of Emergency Services recommends to prepare for the state’s brutal winters include:
- Winterizing your vehicle
- Dressing in warm layers
- Wearing gloves
- Wearing stocking caps
- If your fingers or toes feel numb, get inside as soon as possible
Uhhh... Really?!?
I live in Baltimore, Maryland... And even I would know to do these things if I visited NoDak during the winter.
But in North Dakota — a state that averages three feet of snowfall per year — the average temperatures for the months of January, February, and March are 9, 17 and 28 degrees respectively…
You would think North Dakotans know what to do to prepare for a wintery onslaught...
Advertisement
The Fund That NEVER Loses Money
Despite what you may have heard, we haven't seen the last of market volatility -- and we're not likely to for months, if not years, to come.
But there is good news: You CAN make money -- lots of it -- even in turbulent times like these.
Better yet, you can do it safely with "Crisis-Proof Investing." It's a high-gain, low-risk way to reach your investment goals, with a 30-year track record of success.
Click here to learn more about "Crisis-Proof Investing" and get my latest "Crisis-Proof Portfolio" today.
But the truth is North Dakota officials have real reason to be concerned.
You see, the housing shortage in North Dakota is so bad, makeshift tent cities are popping up in parks and parking lots all over eastern part of the state.
And the people living in these tents are from states like Texas, Louisiana, Alabama, and Oklahoma.
Many are from Mexico — and have never seen snow, much less a blizzard.
The housing crisis is so dire that a former church in Killdeer and a former hospital in Stanley, ND, are being converted to apartments.
In towns like Minot and Williston, temporary housing used in the Winter Olympics in Vancouver and for people displaced by Hurricane Katrina is being shipped in...
Obama even sent HUD Secretary Donovan to the state this past August to get a first-hand look at the housing crisis.
Housing prices have jumped 20% from a year ago. Only 1% of the total rental property supply is available for rent.
Lease and real estate agents can barely keep up, often not returning phone calls for days.
The convenience store in Stanley — the Cenex — is struggling just to meet demand.
“We really just can’t hardly keep up with the explosion of new business. I’ve been here just over a year and we’ve been doing construction, remodeling ever since I got here. Right now, we just need to catch our breath,” said a store manager.
What’s going on in North Dakota?
A bona fide oil rush.
It seems like new oilfields are being discovered almost every year in NoDak.
You know about the Bakken already... Two-and-a-half years ago, we told you about the Bakken and how to play it.
If you followed our advice from the very start, this is what you made from our Bakken boom stocks:
It’s been a profit bonanza for sure in the Bakken.
But with the technological breakthrough of fracking and horizontal drilling proven in the region, other previously undrillable formations are now open for business...
The latest is the Spearfish formation in ND near the Canadian border. In April of this year, EOG announced the Spearfish discovery.
The Spearfish is a Jurassic formation, and is at a much shallower depth than the Bakken — only about 3,000 feet below the surface — so it should be cheaper to drill.
Drilling times for the Spearfish wells on the Canadian side (called the Waskada) were only about four days from spud to reaching total depth...
Because of existing infrastructure in place, those Canadian wells only cost about $1 million, and EOG hopes that once comparable infrastructure is in place, the U.S. wells will carry comparable price tags.
With 80,000 net acres, EOG holds a sizeable amount of Spearfish acreage and plans to utilize six laterals per 160-acre spacing.
Initial production of the wells is estimated at around 200 barrels per day. The two existing U.S. wells are producing 285 and 305 barrels per day, respectively.
By 2012, EOG projects it could produce as many as 18,500 barrels per day.
The Spearfish is picking up steam.
This past August, Minot-based media outlet KXMCTV reported, "… Major oil companies are making moves that suggest a second oil boom is in its infancy."
Lynn Helms, director of the North Dakota Department of Mineral Resources, indicates oil companies are expecting to drill 50 wells this year to figure out the edges of the primary part of the Spearfish play, and 50 to 100 next year.
They then expect to go into full development mode, which means they could drill anywhere between two and seven thousand wells up there.
Of course, we’re hot on this development.
And we’ve discovered a $7 stock that will go great guns with the development of the Spearfish… as well as many of the other fracking and horizontal drilling formations.
Stay tuned for more,
Brian
Monday, October 25, 2010
What is Saltwater Economy?
I totally admit that I'm a biggest fan of Paul Krugman, a devoted to his essays on New York Times posts and admire his writing on several of his book. But who is Krugman? He's a saltwater!
I'm a saltwater too, I believes in Keynesian approach in macroeconomic decision. As the matter of fact, Keynesian is the most relevant economic thought for macroeconomic intervention in my personal perspective.
So what is saltwater?
Saltwater economics colloquially refers to a school of thought which has a more Keynesian approach with overarching macroeconomic analysis, tends to scepticism about the efficiency of markets and has called for government spending to help the world pull out of recession. Many of the economists associated with it are based at the US’s coastal academic universities and institutions - Harvard, Princeton, Berkeley.
and who are the opposite of Saltwater Economic? A Freshwater!
Freshwater economics colloquially refers to a school of thought whose macroeconomic conclusions are more closely rooted in microeconomics, which places greater trust in markets and is sceptical of active fiscal policy. Economists whose work is in this tradition are often based at US universities close to the Great Lakes – Chicago, Minnesota, Carnegie-Mellon.
I'm here not to talk about freshwater.
In fiscal policy, a Saltwater economists often support the effectiveness of fiscal policy, Advent advocate the effectiveness of fiscal stimulus, following Keynesian economics.
Some freshwater economists arguing that business cycles are efficient and government cannot fiscal policy and/or monetary policy. This contrasts with saltwater Keynesian economists, who argue that "business cycles" represent market failures, and should be counteracted. In 2009 Paul Krugman commented that "since then [forty years ago] macroeconomics has divided into two great factions: “saltwater” economists (mainly in coastal U.S. universities), who have a more or less Keynesian vision of what recessions are all about; and “freshwater” economists (mainly at inland schools), who consider that vision nonsense". However, Krugman noted that the difference had become mainly theoretical during the The Great Moderation, but that the financial crisis cast the dichotomy in a new, harder light.
(sources from WikiPedia)
Eventually the different between a saltwater and freshwater are just the theory. These competing theories have set the terms for national and international debate over economic policy for decades. Freshwater economists point to the 1970s as an example of government intervention causing high unemployment and inflation which, they claim, otherwise wouldn’t have occurred. Saltwater economists view government regulation and discretionary fiscal policy as an important and necessary part of overseeing the economy. They do not view consumers in the marketplace as perfectly rational variables.
Government intervention is important, I personally believes that nobody can run everything on their own. There are only two saltwater theories which are the fiscal policy and and Keynesian economic. In economy, fiscal policy is the use of government expenditure and revenue collection to influence economy. Fiscal policy can be contrasted with the other main type of macroeconomic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the money supply. The two main instruments of fiscal policy are government expenditure and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy e.g aggregate demand, pattern on resource allocation and the distribution of income.
Keynesian economic is is a macroeconomic theory based on the ideas of 20th century British economist John Maynard Keynes. Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.
While freshwaters argued their theories such as
I'm a saltwater too, I believes in Keynesian approach in macroeconomic decision. As the matter of fact, Keynesian is the most relevant economic thought for macroeconomic intervention in my personal perspective.
So what is saltwater?
Saltwater economics colloquially refers to a school of thought which has a more Keynesian approach with overarching macroeconomic analysis, tends to scepticism about the efficiency of markets and has called for government spending to help the world pull out of recession. Many of the economists associated with it are based at the US’s coastal academic universities and institutions - Harvard, Princeton, Berkeley.
and who are the opposite of Saltwater Economic? A Freshwater!
Freshwater economics colloquially refers to a school of thought whose macroeconomic conclusions are more closely rooted in microeconomics, which places greater trust in markets and is sceptical of active fiscal policy. Economists whose work is in this tradition are often based at US universities close to the Great Lakes – Chicago, Minnesota, Carnegie-Mellon.
I'm here not to talk about freshwater.
In fiscal policy, a Saltwater economists often support the effectiveness of fiscal policy, Advent advocate the effectiveness of fiscal stimulus, following Keynesian economics.
Some freshwater economists arguing that business cycles are efficient and government cannot fiscal policy and/or monetary policy. This contrasts with saltwater Keynesian economists, who argue that "business cycles" represent market failures, and should be counteracted. In 2009 Paul Krugman commented that "since then [forty years ago] macroeconomics has divided into two great factions: “saltwater” economists (mainly in coastal U.S. universities), who have a more or less Keynesian vision of what recessions are all about; and “freshwater” economists (mainly at inland schools), who consider that vision nonsense". However, Krugman noted that the difference had become mainly theoretical during the The Great Moderation, but that the financial crisis cast the dichotomy in a new, harder light.
(sources from WikiPedia)
Eventually the different between a saltwater and freshwater are just the theory. These competing theories have set the terms for national and international debate over economic policy for decades. Freshwater economists point to the 1970s as an example of government intervention causing high unemployment and inflation which, they claim, otherwise wouldn’t have occurred. Saltwater economists view government regulation and discretionary fiscal policy as an important and necessary part of overseeing the economy. They do not view consumers in the marketplace as perfectly rational variables.
Government intervention is important, I personally believes that nobody can run everything on their own. There are only two saltwater theories which are the fiscal policy and and Keynesian economic. In economy, fiscal policy is the use of government expenditure and revenue collection to influence economy. Fiscal policy can be contrasted with the other main type of macroeconomic policy, monetary policy, which attempts to stabilize the economy by controlling interest rates and the money supply. The two main instruments of fiscal policy are government expenditure and taxation. Changes in the level and composition of taxation and government spending can impact on the following variables in the economy e.g aggregate demand, pattern on resource allocation and the distribution of income.
Keynesian economic is is a macroeconomic theory based on the ideas of 20th century British economist John Maynard Keynes. Keynesian economics argues that private sector decisions sometimes lead to inefficient macroeconomic outcomes and therefore advocates active policy responses by the public sector, including monetary policy actions by the central bank and fiscal policy actions by the government to stabilize output over the business cycle.
While freshwaters argued their theories such as
- Bounded rationality
- Policy Ineffectiveness Proposition
- Rational expectations
- Real Business Cycle Theory
- Ricardian equivalence
- Say's Law
- Treasury view
- Efficient-market hypothesis
Sunday, October 24, 2010
Where Do We Live?
It's amazing that we have billion of humankind living in this planet, contributing to to economic success and distributing the wealth of each nation to the limit of its capabilities, hence this phenomena is why we as a humankind are scattered along this globe.
Where do we live? A simple but yet subjective question thrown out on this essay.
Travelling a lot! That quote is best to be linked to my hectic life, I'm blessed to have the opportunity to travel the globe and learn the nature of human behaviors, economic approaches, unique sociology systems and demographic cultures. This observation helps me to understand more towards the most essential necessity of human life which is a house.
Humankind dated back from early BC are tend to find a place to settle, and the most popular settlement is near the river banks and seasides, some archaeological research found that several amazonian tribe reside near the river,although there are also tribes who choose to lives inside the caves. All of these early settlements have 2 factors in common, such as the supply of water, and moisture of soil. Earlier homo sapiens live in a very organized community. Producing foods, tools to hunt and others handy application in order to survive in this world.
All right.. I'm not doing this elaboration to promotes history lesson instead to emphasize the economic relation that we shares from our ancestor.
Human life are motivated by incentives, I learn that a in a hard way due to my crazy background. Thanks to Professor Paul Krugman teaching, his books and lectures has guides me and other aspiring economists. Human life are motivated by incentives. Let alone the sentence to be interpreted by you! What we did whether it is based on economic favors or personal favors are solely based on incentives. This theory are common sense, look at one example, there are two types of condom available on the supermarket, one is the cheaper than the another one but the expensive type of condom offers 15% discount for the whole pack comprising 12 pieces of condom per pack, after making the calculation, the differentiation of the expensive type of condom only exceed a fraction of 2% more than the cheaper condom. and we realize we hit a good deal by assuming the expensive condom are better in quality rather than the cheaper type. unless the penises are made of steel.. that might be a different issue.
Take a look at the condom theory again. Our brain are moved by incentive, by assuming it cheap or good deal, we secured the deal. And this phenomena is the beauty part of our human life system, because of our capability to think and compare, and it makes humankind productive. The same theory goes to why we choose a settlement location. Let alone the Paleolithic period where on that period, choices are limited.
We can see that's there community even in the remotest area in the world. Some live in the jungle, at the seaside, on the countryside, in the middle of nowhere village. A question lies here, why do they choose to live there? Is it because they have to? They wanted to? They needed to? or They forced to?
The world is in the era of network and information, we call it globalization but I like to call it Lady Diana Effect (read on Lee Iacocca's Where All The Leaders Gone) There's no such things as we called "I have no idea that that's possible", if these people want to move and start a new living in the city, they actually can. But why didn't they? The lamest answer from a family that I met in Ethiopia when I asked them on why they didn't make a move to Addis Ababa? They say they preserves the nature by living in the jungle. Preserve the jungle? The nation with its nominal GDP of USD 32.32 Billion have the worst water system to its population, the water sample contain e-coli, yes!! e-coli will scare people like me and you. But they insisting to stay there. Why?
Incentives
Yes, throughout the whole process of mankind, we calculate the pros and cons, the yin and yang for every factors of our decision and the fine guideline that we attribute is incentive. Incentives is convenience, incentives is bonus.
A short trip that I've made in 2007 to Oslo, Norway has triggered me a question. Why do people live there? The vodka are expensive, the tobacco tax are scary, the whether are constant winter which will freeze you to death. The estimated population for Norway are 4,906,400 with density of 31/sq mi. Almost it is hard for me to understand what kind of life they have there. But, eventually, they do have life, they do have a structured socioeconomic, and they enjoyed their salmon well. What I've learn from them is that the life in Norway are just similar to the life at other places around the world. Human tend to adapt every situation that they faces. E.g If the price of imported goods increased, we'll tend to purchase local manufactured products. This theory implied to all of us.
Why do we choose to live at where we are now?
We can make a survey to common people and ask them whether they have any dream country to live and settle. Most of them are some places in mind. Reason for this is because we like to have security in our life, we want a quality in our daily standard, we insist the best for our life. But this is just a dream for most of them. Most of these people are stuck! Reasons such as liability, responsibility and commitment has blocked their intention to move unless they are truly determine to move and have an incentive for moving.
The way we live, the socioeconomic is always the same.
Economy is just a study of human behavior in making their decision, and we are totally agree to say that wherever you live, even in North Pole, you are all are bounded by incentive that the location provides for you.
Where do we live? A simple but yet subjective question thrown out on this essay.
Travelling a lot! That quote is best to be linked to my hectic life, I'm blessed to have the opportunity to travel the globe and learn the nature of human behaviors, economic approaches, unique sociology systems and demographic cultures. This observation helps me to understand more towards the most essential necessity of human life which is a house.
Humankind dated back from early BC are tend to find a place to settle, and the most popular settlement is near the river banks and seasides, some archaeological research found that several amazonian tribe reside near the river,although there are also tribes who choose to lives inside the caves. All of these early settlements have 2 factors in common, such as the supply of water, and moisture of soil. Earlier homo sapiens live in a very organized community. Producing foods, tools to hunt and others handy application in order to survive in this world.
All right.. I'm not doing this elaboration to promotes history lesson instead to emphasize the economic relation that we shares from our ancestor.
Human life are motivated by incentives, I learn that a in a hard way due to my crazy background. Thanks to Professor Paul Krugman teaching, his books and lectures has guides me and other aspiring economists. Human life are motivated by incentives. Let alone the sentence to be interpreted by you! What we did whether it is based on economic favors or personal favors are solely based on incentives. This theory are common sense, look at one example, there are two types of condom available on the supermarket, one is the cheaper than the another one but the expensive type of condom offers 15% discount for the whole pack comprising 12 pieces of condom per pack, after making the calculation, the differentiation of the expensive type of condom only exceed a fraction of 2% more than the cheaper condom. and we realize we hit a good deal by assuming the expensive condom are better in quality rather than the cheaper type. unless the penises are made of steel.. that might be a different issue.
Take a look at the condom theory again. Our brain are moved by incentive, by assuming it cheap or good deal, we secured the deal. And this phenomena is the beauty part of our human life system, because of our capability to think and compare, and it makes humankind productive. The same theory goes to why we choose a settlement location. Let alone the Paleolithic period where on that period, choices are limited.
We can see that's there community even in the remotest area in the world. Some live in the jungle, at the seaside, on the countryside, in the middle of nowhere village. A question lies here, why do they choose to live there? Is it because they have to? They wanted to? They needed to? or They forced to?
The world is in the era of network and information, we call it globalization but I like to call it Lady Diana Effect (read on Lee Iacocca's Where All The Leaders Gone) There's no such things as we called "I have no idea that that's possible", if these people want to move and start a new living in the city, they actually can. But why didn't they? The lamest answer from a family that I met in Ethiopia when I asked them on why they didn't make a move to Addis Ababa? They say they preserves the nature by living in the jungle. Preserve the jungle? The nation with its nominal GDP of USD 32.32 Billion have the worst water system to its population, the water sample contain e-coli, yes!! e-coli will scare people like me and you. But they insisting to stay there. Why?
Incentives
Yes, throughout the whole process of mankind, we calculate the pros and cons, the yin and yang for every factors of our decision and the fine guideline that we attribute is incentive. Incentives is convenience, incentives is bonus.
A short trip that I've made in 2007 to Oslo, Norway has triggered me a question. Why do people live there? The vodka are expensive, the tobacco tax are scary, the whether are constant winter which will freeze you to death. The estimated population for Norway are 4,906,400 with density of 31/sq mi. Almost it is hard for me to understand what kind of life they have there. But, eventually, they do have life, they do have a structured socioeconomic, and they enjoyed their salmon well. What I've learn from them is that the life in Norway are just similar to the life at other places around the world. Human tend to adapt every situation that they faces. E.g If the price of imported goods increased, we'll tend to purchase local manufactured products. This theory implied to all of us.
Why do we choose to live at where we are now?
We can make a survey to common people and ask them whether they have any dream country to live and settle. Most of them are some places in mind. Reason for this is because we like to have security in our life, we want a quality in our daily standard, we insist the best for our life. But this is just a dream for most of them. Most of these people are stuck! Reasons such as liability, responsibility and commitment has blocked their intention to move unless they are truly determine to move and have an incentive for moving.
The way we live, the socioeconomic is always the same.
Economy is just a study of human behavior in making their decision, and we are totally agree to say that wherever you live, even in North Pole, you are all are bounded by incentive that the location provides for you.
Subscribe to:
Posts (Atom)