Banks And Housing: No Systemic Risk…Yet

I attending a talk on property today, which brought to mind the “evidence” that we have a budding property bubble. The consensus today is that there isn’t one, despite the anecdotal evidence – just a boom stemming from pent up demand. Prices haven’t zoomed as excessively high or are as volatile as they are in Singapore or Hong Kong.

But my focus is more on what systemic risk a potential bubble – or boom, as the case may be – might pose to the banking system. I already talked about this issue at the beginning of the month, which to my surprise was one of my more popular posts.

July 2010 Monetary Conditions Update

There’s lots of things to talk about this month, but I haven’t much time to go into detail just yet. So this will be short and sweet, until I can go over the numbers fully.

First news is that BNM has revamped the presentation of the Monthly Statistical Bulletin – there are a few new things in there such as extended coverage of the banking system, and a few losses like the full breakdown of the money supply aggregates.

But as far as the monetary numbers are concerned, what I’m seeing is basically a continuation of some of the trends we’ve been seeing in the past few months. Money supply growth has held steady in July (log annual and monthly changes; seasonally adjusted):

Deputy Finance Minister Says Gold Dinar Is Ok – For Investment Only

Back in the news again:

Dinar only for keeping, not trading, says Awang Adek

BACHOK: The Federal Government does not see any problem if the gold dinar and silver dirham introduced by the Kelantan government are only for keeping and not trading in the open market.

Deputy Finance Minister Datuk Dr Awang Adek Hussin said the federal government would oppose the state government if it tried to use them as currency as it was against Bank Negara regulations and could victimise traders.

I’ve said quite enough regarding this subject already, but I’ sure this won’t be last we’ll hear of this issue.

Bill Mitchell Disses Morgan Stanley

I reported yesterday on a Morgan Stanley report that discusses the state of government finances. Bill Mitchell, a proponent of Modern Monetary Theory (MMT), has a fine critique of the piece:

There is no solvency issue for a sovereign government

…There is no debt crisis in sovereign nations. The only public debt problems that have emerged in the current crisis have been in non-sovereign countries and even then with appropriate “fiscal support” those crisis were managed. I am referring to the intervention by the ECB when they decided to purchase outstanding public debt in the secondary bond markets – which amounte [sic] to a fiscal act within a flawed monetary system.

But blurring the distinction between sovereign and non-sovereign nations is the starting gate for this absurd journey in self-importance that Marès has produced.

The report is “the first issue of Sovereign Subjects” which is “a new Morgan Stanley publication focusing on sovereign risk in advanced economies”. Please write to Morgan Stanley and tell them that the publication is a crock and they should save their time by not producing a second issue.

The first issue of this propaganda document perpetuates some classic myths and then some…

If you’ve ever been dissatisfied with some of the answers that mainstream economics serves up, this guy is required reading (along, I think, with Scott Sumner). I find myself attracted to some of the ideas behind MMT, which shares some characteristics with Post Keynesian thought, though I don’t know if I’d commit wholesale to this ideology…yet. But the more I read and explore economics, the more their ideas make sense – certainly the idea of fiscal austerity in the face of falling economic activity goes against my instincts, especially when monetary authorities aren’t doing enough.

But the read the whole piece…it’s worth your while.

A Change Of Governance At The IMF?

From The Economist Free Exchange blog:

Intrigue at the IMF

THINGS are hotting up at the IMF, and it doesn’t have anything to do with bail-outs (or with the heat wave in Washington, DC). Instead, the chatter at the fund is about America’s decision to abstain in a routine vote on the size of the body’s executive board, news of which crept out into the world beyond 19th Street at the end of last week. This may sound arcane (and in a way it is), but it is something that could force the Fund’s members to make a more serious effort to ensure that the long-promised shift in decision-making power at the IMF towards big, fast-growing emerging economies (like China, India and Brazil) materialises.

This has been brewing for a long while, and it took the US siding with emerging economies, ironically, to push the process forward.

Sovereign Debt Defaults And Financial Oppression

There’s a fascinating article on Morgan Stanley’s Global Economic Forum today, assessing the state of government finances in the West:

Ask Not Whether Governments Will Default, but How
By Arnaud Mares

The sovereign debt crisis is not European: it is global. And it is not over. The European sovereign debt crisis of spring 2010 was a misnomer in more ways than one: there was not one crisis but two. And it will continue well beyond 2010, in our view. The first crisis was, and remains, an institutional crisis of the euro, caused by a flawed multilateral fiscal surveillance framework. Steps have been taken towards a correction of the flaws with a move from peer pressure to peer control of fiscal policy. This is reflected by the acceptance by the Greek, Spanish and Portuguese governments of fiscal measures largely dictated from Berlin and Brussels. The second crisis was, and remains, a sovereign debt crisis: a crisis caused by sovereign balance sheets being overstretched, to the point where insolvency ceases to be merely possible and becomes plausible. This crisis is not limited to the periphery of Europe. It is a global crisis and it is far from over. We take a high-level perspective on the state of government balance sheets and conclude that debt holders have to be prepared to enter an age of ‘financial oppression'.

Excess Reserves Don’t Necessarily Lead To Excess Credit Creation

I just can’t leave this topic alone. But it’s interesting to contrast the Malaysian experience with what’s going on in the US and Europe right now.

In my post on hyperinflation, I made the assertion that credit creation is no longer an asset side phenomenon driven by the logic of fractional reserve accounting, but limited on the liabilities side of the balance sheet by capital ratios. This in turn means that excess reserve creation carried out by western central banks isn’t necessarily inflationary.

Here’s some supporting evidence, in the Malaysian context. First the track record of loan growth since 1998 (log annual changes):

Jim Rogers Is Wrong

Maybe its his Asian perspective, since he’s based in the East now, but calling for interest rate hikes in the developed world is about on par with implementing fiscal austerity in a recession…oh, wait, they’re doing that too:

Rogers Says China, World Should Raise Rates in Inflation Fight

China and other global economies should increase interest rates to contain a surge in inflation, said investor Jim Rogers, chairman of Rogers Holdings.

“Everyone should be raising interest rates, they are too low worldwide,” Rogers said in a phone interview from Singapore. “If the world economy gets better, that’s good for commodities demand. If the world economy does not get better, stocks are going to lose a lot as governments will print more money.”

Hyperinflation? Ain’t Happening

There’s a popular belief that’s been hanging around since late 2008 that the US and other countries that have engaged in quantitative easing a.k.a. money printing, are going to experience hyperinflation and currency collapses. If you’re not familiar with the term, it’s inflation on steroids, where currency losses its value faster than you can spend it, and where prices are higher in the afternoon than it is in the morning.

The most recent and historically extreme example of the hyperinflation phenomenon is of course Zimbabwe, which has come to symbolise economic and monetary mismanagement on an unbelievable scale. But hyperinflation is not just a disease of weak and developing nations. The other prominent example is the short-lived Weimar Republic, the government that replaced Imperial Germany in the aftermath of World War I. There have of course been lesser borderline cases in the past century, notably Argentina and Turkey, though inflation in those countries never reached the sublime heights it did in Zimbabwe and Germany.

June 2010 Employment Report

I reported a few months back that the Department of Statistics has started issuing monthly employment and unemployment reports. I haven’t touched the subject since, because unemployment hasn’t varied much, even in the depths of the recession. But I’m going to cover this from now one, partly from a sense of completeness, and partly because I suspect its going to be important later on.

The first you’ll note looking at the numbers, is how volatile they actually are:

Development Economics: A Layman’s Primer

It’s really short on the theory, but that’s what makes this World Bank blog post a good primer for development issues:

Pathways to Development: What We Know and Don’t Know
Raj Nallari

Development is about welfare enhancing transformation through economic, social, political, and technological progress. Transformation is predicated on per capita income growth but development is also about progress in reduction of poverty and inequality, individual capabilities, access to social services, and quality of life. Both growth and development are also predicated on distributive politics of how a society is able to deal with vested interests and social conflicts.

During past sixty years, growth spurts have occurred in most countries but generally outcomes have fallen short of expectations. Developed economies have averaged growth rates of 2.4 percent during 1990 and 2008 while developing economies have collectively increased their GDP by an average of 4.7 percent over the same period. For low and middle income countries, physical capital is the principal determinant of growth, while for upper middle income and higher income economies total factor productivity was the most important driver. TFP is a catchall for other factors, which are human capital variously measured, and its quality; technological capability and innovation; managerial skills; organizational effectiveness; institutions affecting incentives, competition, allocative efficiency and governance; and the characteristics of urbanization.

No Stimulus Measures This Time

So the PM says:

PM: Strengthening economic fundamentals better than stimulus packages

PUTRAJAYA: It is better for the government to strengthen economic fundamentals rather than introduce stimulus packages frequently to overcome the economic slowdown, the Prime Minister said.

Datuk Seri Najib Tun Razak said the country needed to avoid introducing stimulus packages too frequently because it would increase the government's deficit.

However, Najib said that stimulus measures, especially for local investors to increase investment, needed to continue.

"If we do this and projects with big multiplier effect on the economy are implemented, then even with a slight drop in foreign demand, we can still achieve our 6% target," he said…

GNI And Outward FDI

etheorist is calling for a shift from measuring economic growth in terms of GDP to measuring it in terms of Gross National Income (GNI):

Some Theoretical Issues in the Malaysian Economy

…With the focus on the livelihood of Malaysia, the correct approach to measuring the improvement in the economy is the GNI or GNP, and not GDP. When the focus is on GDP, the focus tends to concentrate on foreign investors. With GNP, the focus will the opportunities that are being offered or made available to Malaysians, whether those opportunities are at home or abroad. GNP should be an integral part of the 1Malaysia concept, for it counts Malaysians whether they may be.

One More Step Towards Internationalisation Of The Ringgit

One last vestige of the capital controls that Malaysia implemented in September 1998 is that the Ringgit is still barred from international convertibility – to change any foreign currency into Ringgit or vice versa, you still have to come to Malaysia.

BNM yesterday announced one more step to getting rid of that restriction. Effective immediately, settlement of foreign obligations can now be conducted in Ringgit terms. You still have to go through a local bank, but you can use an account with an overseas branch of those banks – a big step.

July 2010 CPI: Subsidy Cuts Start Biting

Was it coincidence that the July CPI report was released on the same day as GDP? Last month’s surprise cuts in sugar subsidies and hike in petrol prices have already taken effect on inflation in July (log annual and monthly changes; 2000=100):

2Q 2010 GDP: Have We Peaked?

What a change a quarter makes – from the optimism from when the first quarter numbers came out, to a much more sober assessment of our chances going forward.

On the plus side, my little forecasting exercise last week didn't do me much wrong. Today's 2nd quarter GDP report from DOS showed real output hit RM138.5 billion, a little under my IPI-based forecast of RM139.1 billion. Growth numbers are a little further off though at 8.9% (actual) against 9.4% (forecast), but that's not too bad compared to the consensus forecast of 8.4%.

Where’s the growth coming from? Seemingly from all sources (log annual changes; seasonally adjusted; 2000=100):

Testing The Purchasing Power Of Gold

[This post has been a few days in gestation, because I had to deal with my laptop finally dying on me after six years of heavy duty wear and tear– RIP Thinkpad – and the sheer amount of work collating and analysing the data. Hope you guys enjoy this.]

I’ve been following the arguments on rocky’s bru blog on whether the introduction of the dinar and dirham in Kelantan was a good idea. This is of course a completely separate issue to whether Kelantan is within the law in doing so.

But the arguments in support seem to devolve along the following four lines:

1. Gold and silver were used as the basis for currencies during much of Islamic history, and thus for that reason worthy of emulation;
2. Gold and silver are less susceptible to speculation;
3. The value of gold and silver to other commodities are more stable relative to fiat currencies;
4. They also maintain their value better against other commodities over time.

The first argument is indisputable, while the second is absolutely untrue – the present bull run in gold is about as frothy a bubble as I’ve ever seen. The other two arguments sound similar, but actually aren’t. Argument 3 is a hypothesis regarding the variance of commodity prices in gold terms relative to fiat currencies; argument 4 is a hypothesis of the mean –both can be statistically tested.

I originally intended this post to test hypothesis 3 and 4, but as it turns out I needn’t have bothered – all you need is an eyeball check.

Protection For Part Time Work

This is better than the minimum wage proposal. Yesterday, the Human Resource minister announced that EPF, SOCSO, and medical benefits are now mandatory for part time workers:

M’sian workers can take on part time work from Oct 1: Dr Subra (Update) By ALLISON LAI

JASIN: Some 17.5 million Malaysian workers can work part time from Oct 1 under a new clause in the Employment Act enabling them to earn extra income and reduce dependency on foreign workers, said Human Resource Minister Datuk Dr S. Subramaniam.

The new regulation under the Employment Act 1955 would apply to some 12mil existing workers from both private and public sectors with another 6.5mil latent workforce in the country…

…Dr Subramaniam said that according to the new regulation, part-time workers would be given salaries and other relevant benefits such as Employees Provident Fund (EPF) contributions, Social Security Organisation (Socso) coverage and medical entitlements based on a pro rata basis…

…He said the 6.5 million latent workforce in the country includes housewives, disabled citizens, students and undergraduates who are productive workers.

Most of them from the latent workforce are skilled and educated.

What’s not mentioned is that most of this “latent” workforce are actually women who have a low labour force participation rate. Here’s one more step for Malaysia in getting out of the middle income trap – greater utilisation of the existing workforce.

Kelantan Issues Gold Dinar: Is This Legal?

In yesterday’s news:

Kelantan launches gold dinar

KOTA BARU: Kelantan paved the way to become the first state to introduce the gold dinar and silver dirham currency.

Speaking when launching the Syariah currency Thursday, Mentri Besar Datuk Nik Abdul Aziz Nik Mat said the state would strive to expand the use of the gold dinar and silver dirham in all transactions, including paying civil servants' remuneration…

…Nik Abdul Aziz, who is also PMBK chairman, said to date 1,000 traders had agreed to use the gold dinar and the dirham silver currency in their transactions, besides Lembaga Tabung Haji and Bank Islam Malaysia.

"There is no reason why transactions in syariah currency cannot be practised in the state as it was widely used thousands of years before the fall of the Ottoman Empire," he said, adding that other states were encouraged to use the currency. - Bernama

The (Non-)Impact of Stimulus Spending: Injecting A Dose of Reality

[Warning: this is a long and wonkish post]

I’ve mentioned before that I didn’t think that last year’s stimulus spending had much of an impact (here and here for instance). I think it’s time to examine that question in more detail, especially in light of yesterday’s Federal Open Market Committee statement, which makes the case for further monetary policy support for the US economy due to slowing US and global growth. In other words, is there a case for further fiscal stimulus to keep growth going in the Malaysian economy?

etheorist stated a week back that he began blogging to fight misconceptions over the Keynesian fiscal multiplier. We’re about to find out what he meant.

To All Muslims…

…Ramadhan Mubarak dan  Selamat Berpuasa.

June 2010 Industrial Production and Updated 2Q GDP Forecast

June’s industrial production data is now out from the Department of Statistics, and show some moderation in growth (log annual and monthly changes; 2000=100):

Debating the China Model

de minimis yesterday posted about an article in The Economist last week regarding the failures of industrial policy. “Industrial policy” in this sense refers to the practice of governments attempting to choose “winners” that can help accelerate economic growth and development.

I’m pretty sure Malaysians can cite our own examples of failures in industrial policy.

Explaining Adultery and Polygamy

Frances Wooley on the economics of adultery:

Adultery and Income Inequality

Why would any woman choose to have a relationship with married man?

If all men were equal, being a married man's mistress would never make economic sense: why share with another woman when you can have a man to yourself?

But if some men are vastly better off than others, a one-night stand with Tiger Woods starts looking like a reasonable proposition. Gary Becker quotes George Bernard Shaw to make this point: "the maternal instinct leads a woman to prefer a tenth share in a first rate man to the exclusive possession of a third rate." Becker's theory, like many others, predicts that highly unequal societies are more likely to be polygamous.

Why is this relevant to Malaysia? At over 40,we have the worst Gini coefficient measurement (which measures income inequality) in the East Asia region.

Outward FDI: A Practical Illustration

In the Star today:

Why Indons replaced M'sia as top palm oil producer?
Hanim Adnan

Malaysian palm oil sector must not lose its focus

INDONESIA’S taking over Malaysia as the world’s largest crude palm oil (CPO) producer in 2006 had often been associated with the mammoth size of the oil palm planted areas.

In fact, many however failed to comprehend that it was the much increased CPO production in the ensuing years – mainly in terms of higher fresh fruit bunches yield and oil extraction rates – that significantly set Indonesia far ahead from Malaysia’s continued stagnanting [sic] CPO production.

Measuring The Many Dimensions Of Poverty

A new paper from the Oxford Poverty and Human Development Initiative discusses a new way to measure poverty (abstract):

Acute Multidimensional Poverty: A New Index for Developing Countries
Sabina Alkire and Maria Emma Santos

This paper presents a new Multidimensional Poverty Index (MPI) for 104 developing countries. It is the first time multidimensional poverty is estimated using micro datasets (household surveys) for such a large number of countries which cover about 78 percent of the world´s population. The MPI has the mathematical structure of one of the Alkire and Foster poverty multidimensional measures and it is composed of ten indicators corresponding to same three dimensions as the Human Development Index: Education, Health and Standard of Living. Our results indicate that 1,700 million people in the world live in acute poverty, a figure that is between the $1.25/day and $2/day poverty rates. Yet it is no $1.5/day measure. The MPI captures direct failures in functionings that Amartya Sen argues should form the focal space for describing and reducing poverty. It constitutes a tool with an extraordinary potential to target the poorest, track the Millennium Development Goals, and design policies that directly address the interlocking deprivations poor people experience. This paper presents the methodology and components in the MPI, describes main results, and shares basic robustness tests.

Malaysia Getting Serious About A Minimum Wage

We’re going to see a proposal to the Cabinet in October:

Should bosses pay a minimum wage? - RASHVINJEET S.BEDI

About a third of the country’s working population still earns less than RM700 monthly, according to the Human Resources Ministry which is now drawing up a proposal for a national minimum wage.

...A study on wages initiated by the Human Resources Ministry reveals that almost 34% of about 1.3 million workers in the country still earn less than RM700 a month, according to a report in The Star on Friday.

Conducted last year, the National Employ­ment Return study stresses on the need for wages to be increased, as the findings show it is difficult to rely on market forces alone.

Human Resources Minister Datuk Dr S. Subramaniam cites a World Bank study that found that the wage trend in Malaysia has recorded only an annual 2.6% growth during the past 10 years. His ministry, he says, will table a proposal on a national minimum wage to the Cabinet by October.

A (Mostly Correct) Historical View Of The Electrical & Electronics Trade In Malaysia

Dr Fong Chan Onn describes Malaysia’s historical love affair with E&E exports:

Reviving the golden goose

Malaysia has to go the extra mile to offer investors better terms than our competitors. The country must keep its ears to the ground and be open to the needs of new-wave entrepreneurs…

…Our love affair with electronics began in the early 1970s when Craig Barrett of Intel, who was scouting for a suitable location for his factory outside of the US, landed in Penang. Tun Dr Lim Chong Eu, then Chief Minister of Penang, heard that he was coming and gave immediate instructions that the roads from George Town to Bayan Lepas be tarred by the following day, ahead of Barrett’s site visit.

Sure enough, the very next day the roads were all ready, as workers toiled all night for the site inspection. So impressed was the CEO of Intel to the responsiveness of the government that he agreed without hesitation that Penang would be his first factory outside of the US.

The rest, as they say, is history.

Property Bubble?

Maybe Bank Negara was right after all. Anecdotal evidence suggests price increases in housing are accelerating:

Welcome to a speculator’s market - THEAN LEE CHENG

SINCE the last quarter of 2009, property prices have not gone up incrementally. They have escalated, especially for landed units. In certain locations, prices may be unsustainable.

Up to the first quarter of this year, intermediate two-storey houses in a popular part of Petaling Jaya were transacting at about RM650,000.

Yesterday morning, an agent said the company had sold several houses facing T-junctions (which are not popular units among buyers) in the same township. These were 2 1/2-storey houses. One was sold for slightly more than RM1mil, among the highest he has ever seen in that location for a house located opposite a T-junction while another was sold for RM950,000, the lowest among the three.

What Determines FDI?

I’m kinda busy today, so not much commentary on this one, but in a new working paper, IMF researchers examine the determinants of FDI across a selection of advanced and developing countries (Malaysia included):

Determinants of Foreign Direct Investment: A Sectoral and Institutional Approach
Walsh, James P & Yu, Jiangyan

Using a dataset which breaks down FDI flows into primary, secondary and tertiary sector investments and a GMM dynamic approach to address concerns about endogeneity, the paper analyzes various macroeconomic, developmental, and institutional/qualitative determinants of FDI in a sample of emerging market and developed economies. While FDI flows into the primary sector show little dependence on any of these variables, secondary and tertiary sector investments are affected in different ways by countries’ income levels and exchange rate valuation, as well as development indicators such as financial depth and school enrollment, and institutional factors such as judicial independence and labor market flexibility. Finally, we find that the effect of these factors often differs between advanced and emerging economies.

2Q 2010 Exchange Rates Review

I haven’t done one of these in a while (in fact, very nearly a year), and there’s been a lot of movement on the Ringgit front in the meantime, even if the controversies over its valuation have somewhat died down.

I thought a few months back that the Ringgit’s appreciation would be contained over the near term, and so it has (index numbers; 2000=100):

On a real trade-weighted basis, the MYR is almost back to its pre-crisis heights, and it’s remained there for the last three months. But that recovery hides an awful lot of extreme volatility in the underlying exchange rates with our major trade partners.

Hidden Monopolies

I wrote a post last year about Maxis offering the iPhone on an exclusive basis, tied to long term contracts. I haven’t changed my mind about the potential problems this brings to consumer choice and what it means long term for competition in the telecommunications industry in Malaysia, even as the local asking price of the iPhone has dropped and with DiGi coming in as a second provider.

My thoughts on the matter bear repeating:

June 2010 External Trade

How the economic picture can change in just a month! In the last trade report, the stagnation in exports fooled virtually everyone (including me) into thinking that growth in 2Q2010 was likely to slow a lot. But a strong IPI reading suggests otherwise, to the point where the government has flip-flopped from thinking about needing to add further stimulus, to being bullish on 2Q growth.

In the same vein, don’t read too much into this month’s export numbers either – they’re not great (log annual and monthly changes; seasonally adjusted):

Open Market Operations And The OPR

[This blog post is a primer for students and anybody else unfamiliar with the normal conduct of monetary policy. satD, you can skip to the end ;)]

Ever wonder how BNM “sets” interest rates across the whole economy? This past year has been a fascinating exercise in observing monetary policy being conducted across the globe, and Malaysia has not been an exception. I’ve certainly learned a lot, especially in bridging the gap between theory and practice.

In Malaysia, we use interest rate targeting to achieve the desired monetary conditions that both maintains stable prices as well as supports growth. That dual mandate can occasionally be at odds, though we don’t have that problem at the moment with inflation low despite an expanding economy.

June 2010 Monetary Conditions Update

Despite three consecutive 25bp hikes in the Official Policy Rate, growth in M2 is keeping pretty steady (log annual and monthly changes, seasonally adjusted):

Working In The Shadows

There’s a new Policy Research Working Paper from the World Bank, estimating the size of the shadow economy in a large sample of 162 countries:

Shadow economies all over the world : new estimates for 162 countries from 1999 to 2007 - Schneider, F., and Buehn, A. & Montenegro, C. E.

This paper presents estimations of the shadow economies for 162 countries, including developing Eastern European, Central Asian, and high-income countries over the period 1999 to 2006/2007. According to the estimations, the average size of the shadow economy (as a percentage of "official" gross domestic product) in 2006 in 98 developing countries is 38.7 percent; in 21 Eastern European and Central Asian (mostly transition) countries, it is 38.1 percent, and in 25 high-income countries, it is 18.7 percent. The authors find that the driving forces of the shadow economy are an increased burden of taxation (both direct and indirect), combined with labor market regulations and the quality of public goods and services, as well as the state of the "official" economy.

FDI Is Not The Issue; Investment Is

The Star’s Managing Editor has compiled a 10-point list of how to improve Malaysia’s investment climate:

10 ways of doing without FDI

A STIR of sorts has been caused by the story that foreign direct investment (FDI) into the country for 2009 fell 81% to US$1.4bil (about RM4.5bil) from US$7.3bil (RM24bil)...

...If greater value-added is what we are after, then increasingly more investments have to be made in the services area – think tourism or education for instance. That does not necessarily need foreign investment – we can use local money.

We have plenty of money in Malaysia – as much as RM250bil at last count. That’s roughly the excess of deposits over loans sitting with the banks throughout the country.

All that money and nowhere to go within the country, is our problem. The money is not chasing investments in the country. And that can mean only one thing – there is a lack of opportunity here.

FDI flows in any particular year into Malaysia pales in comparison to the amount of idle money in the system. What we have to do is to find ways to use that and we will more than mitigate the effects of reduced FDI. Here are 10 ways we can do that.

Bubble, Bubble, Toil & Trouble

A report in the Star suggests that we may have an incipient retail credit bubble:

Mixed views on possible retail credit bubble

…“As current economic traction is positive and interest rates relatively low, (therefore making it accommodative for consumers to take up loans) – a key question to ask the local banking sector now is whether it is high time to re-balance loan portfolios away from retail loans, which dominate half of the industry’s lending,” RAM Ratings head of financial institution ratings Promod Dass said…