Friday, 27 June 2008

Birthday Cupcakes

One year ago today, Krystyn had a brilliant idea for Mummy's birthday. She ordered birthday cupcakes and Mummy was delighted! Jeannie blogged about it and was somehow inspired to save one in the freezer. Yes, she knew.

Today, Mummy is with us and she "brought along" her own birthday cake. Today, we remembered the last date Mummy was born on Earth. Today, Krystyn, J.J., Prince and I shared a birthday cake that makes us grateful Mummy shared her life with us.

Saiful brought some lovely white lilies. He came late so he missed the cupcake.
































































27th of June

Today is supposed to be Jeannie's 49th birthday. As I write this at 5.00 am in the morning, it feels as I felt before many a time in the past; writing letters to Jeannie in the wee hours. Only this time, I cannot place the letter at her bedside table for her to read when she awoke. It is the first time in 23 years we are not celebrating her birthday together.

"My Darling,

It will be exactly one year come 12th July since you went home. I am left with the hope that we will meet again. These past months have been so lonely for me yet you have made them bearable. You have made it easier for us to let you go through the memories you left behind; in ways that only Krystyn, J.J., Prince and I will know. Yet, my Darling we still yearn for your physical presence, your laughter, your touch, .... your love. You live within each of us now my Darling, and we would like to assure you that your lessons are not in vain.

Krystyn; dear Krystyn, is the daughter you have always wanted her to be and there is nothing I can add here that can say more. My Darling, our children have your special qualities and they are shining through the darkness that began with the dimming of your life force as you prepared for home.

J.J. has grown so much this one year Darling, and you can rest assured you have nurtured a solid young man that he is becoming. When my time comes, we can take comfort that the Cheah name will be carried forward proudly and capably as we have a son who is well grounded in the family values you taught him so well. He knows his roots.

Our wonderful Prince Cheah has been the receptacle you left with us to receive and contain in your place, the overflowing abundance of love we feel for you. Amazingly, he has given us back even more than we share with him. We love him as we have loved you and we spoil him as you have spoilt us. Darling, you left him with us because you knew what would be.

My Love, we will be moving to a new house soon and we will have a special place for you there. It would not be our home otherwise. We know you check up on us ever so often and though we feel your presence so strongly, the coincidences you conjure up tell us it is unmistakably You.

Darling, we won't celebrate your birthday this year or in future, but we will celebrate your life everyday of our lives by living and being as you would want us. We love you Mummy."

6.27 am

P/S

Darling, you did it again!! Coincidence??? Your number!! 627!!!!!

CLICK ON PICTURE TO ENLARGE!



Monday, 23 June 2008

J.J. is 18 today

J.J. turns 18 today and this is another first in 18 years we do not have Mummy around physically to celebrate with J.J.

The whole family had been looking forward to J.J.'s. 18th birthday. It was to mark a watershed in J.J.'s life; the family had for so long been thinking of it as the
"coming of age" of our youngest. For one, it would be when J.J. is allowed to have his first drink (cigarettes are out) and I would be the one to buy him that.

Today, at 18 he "officially" takes the next steps towards preparing for adulthood at 21. I will buy him his first beer in his first drinking session this weekend perhaps, and though 18 is just a number
as J.J. himself puts it, he knows it marks the beginning of a new phase in his life.

Mummy may not be here but she is everywhere. Her immortal love permeates. She is in the values that she so carefully nurtured in J.J. and she will be at his birthdays to come. She will always be a gentle reminder and the constant inspiration that guides J.J. as he goes forth on his own life's journey. (Photos to follow)

Sunday, 22 June 2008

Sleepless Days (SD)

SD mostly meant stamp duty to me in the past but in a week when the SAPP (Sabah Progressive Party) announced its intended VNC (Vote of No Confidence) against the PM (Prime Minister or Preacher Man; your preference), PL (Pak Lah), the abbreviation, "SD" has popped up so often on the www, (glaringly not) in the MSM (mainstream media), KK (kedai kopis), in KL (Kuala Lumpur) or along the KL (kaki lima) all because RPK (Raja Petra Kamarudin) made a SD (statutory declaration) regarding the now infamous C-4 (Composition 4). He seems bent on sending some people to hell!

Before we consider the exact contents of RPK's SD (which was more explosive than the C-4 in question) perhaps we should know what a statutory declaration is; including the consequences of making a false one. In Malaysia we have the Statutory Declarations Act 1960 as follows:


LAWS OF MALAYSIA

Act 13

STATUTORY DECLARATIONS ACT 1960

An Act to provide for the making (and taking) of statutory declarations
and for purposes connected with it and incidental to it.

[Peninsular Malaysia—1 June 1961, L.N. 154/1961; Sabah and Sarawak*—1 January 1969, P.U. 488/1968]

Short title
1. This Act may be cited as the Statutory Declarations Act 1960.

Form of declaration
2. It shall be lawful for any Sessions Court Judge, Magistrate,
or Commissioner for Oaths or, subject to section 4 of the Notaries
Public Act 1959 [Act 115], any notary public appointed under the
Notaries Public Act 1959, to take and receive the declaration of
any person voluntarily making the same in Malay or English in the
form in the Schedule.

False declaration punishable under Penal Code
3. Declarations made by virtue of the provisions of this Act
shall be deemed to be such declarations as are referred to in
sections 199 and 200 of the Penal Code [Act 574].

Fees
4. A person making any declaration by virtue of the provisions
of this Act shall pay to the officer or Commissioner taking the
same such fees as the Minister may from time to time by
notification in the Gazette prescribe.

References in Sabah and Sarawak federal laws to repealed
laws

5. Any reference in any federal law in force in Sabah to the
Statutory Declarations Ordinance of Sabah [Cap. 138] and any
reference in any federal law in force in Sarawak to the Statutory
Declarations Ordinance of Sarawak [Cap. 52] or to the Statutory
Declarations Act 1835 [5 & 6 Wm. IV, C. 62], of the United
Kingdom, shall be deemed to be a reference to this Act.

**************************************************************************
The thingy on false declaration is I suppose the main consideration here. Persons making false declarations are the Penal Code and the defining sections are as below:

Section 199.
False statement made in any declaration which is by law receivable as evidence. Whoever, in any declaration made or subscribed by him, which declaration any Court, or any public servant or other person, is bound or authorised by law to receive as evidence of any fact, makes any statement which is false, and which he either knows or believes to be false or does not believe to be true, touching any point material to the object for which the declaration is made or used, shall be punished in the same manner as if he gave false evidence.

Section 200.
Using as true any such declaration known to be false. Whoever corruptly uses or attempts to use as true any such declaration knowing the same to be false in any material point, shall be punished in the same manner as if he gave false evidence.

Obviously, it is a criminal offense to make false statutory declarations not to mention the civil suits that may follow. Surely knowing this, RPK still went ahead and made the following
SD:




STATUTORY DECLARATION

I, RAJA PETRA BIN RAJA KAMARUDIN (IC No: 500927-71-5257), a Malaysian citizen of legal age residing at No. 5, Jalan BRP 5/5, BuKit Rahman Putra, 47000 Sungai Buloh, Selangor Darul Ehsan, do solemnly and sincerely affirm and say as follows:-

1. I have been reliably informed that between about 10 p.m. on 19th October 2006 and early hours of the following day, the night Altantuya Shaariibuu was murdered, three (3) other people were also present at the scene of the crime;

(a) Datin Seri Rosmah Mansor, wife of the Deputy Prime Minister of Malaysia, Dato’ Seri Najib Tun Razak

(b) Acting Colonel Aziz Buyong (then Lt. Col.) a C4 expert

(c) Acting Colonel Aziz’s wife, Norhayati (one of Rosmah’s ADC)

2. My informer states that Acting Colonel Aziz Buyong was the person who placed the C4 on various parts of Altantuya’s body while being witnessed by Datin Seri Rosmah Mansor and Norhayati.

3. I make this Statutory Declaration because I have been reliably informed about the involvement of these three people who have thus far not been implicated in the murder nor called as witnesses by the prosecution in the on going trial at the Shah Alam High Court. I also make this Statutory Declaration because I am aware that it is a crime not to reveal evidence that may help the police in its investigation of the crime.

4. I have further been reliably informed that Prime Minister, Dato Seri Abdullah Ahmad Badawi has received a written report from the Military Intelligence confirming what I have revealed above and that the report was subsequently handed over to his son-in-law, Khairy Jamaluddin, for safe-keeping.

5. I have also been reliably informed that one of the Rulers has been briefed about this matter and His Highness is fully aware of what I have revealed above.

6. I have knowledge of who has informed me of this matter plus I have knowledge of the Ruler who has been briefed and is aware of the matter but I have agreed that I shall not reveal this information other than mention that the Prime Minister and his son-in-law have been handed a written report confirming what I have revealed.

7. The purpose of this Statutory Declaration is to urge all these parties who have been duly informed and have knowledge of this matter to come forward to reveal the truth so that the police are able to conduct a proper and thorough investigation into the murder of Altantuya Shaariibuu.

And I make this solemn declaration conscientiously believing the same to be true and by virtue of the provisions of the Statutory Declaration Act, 1960.

SUBSCRIBED and SOLEMNLY DECLARED )
by the abovenamed RAJA PETRA BIN RAJA KAMARUDIN )
at Makhamah Tinggi Kuala Lumpur )
this 18th day of June 2008 )

Before me,


I have always admired RPK for his fighting style although I do not always agree with some of the shit that he writes. Balls and brains he definitely has and this latest thrust in his efforts to increase the population of Hell not only ups the ante, it hints of a bigger agenda being played out that will change the political landscape of the country.

This SD would likely force the hands of our two lovey dovey top two who seem to be so committed to each other. It looks as though the time-line has been compressed.

Many questions come to mind about the actors in this tragic play:


RPK
* Did he make the SD because he has concrete evidence?
* Is he merely trying to make us think he has concrete evidence?
* He has already said he does not believe in making police reports so what's next?

Razak Baginda
* Is he RPK's source?

Datin Seri Rosmah Mansor
* Having denied her involvement so vehemently in public and if RPK's SD is wrong then she actually has RPK exactly where she would want him; his crown jewels exposed to be cut off anytime. So where's the knife?
* Is she shitting bricks?

Acting Colonel Aziz Buyong
* Who are you?
* What's an acting colonel? A full colonel in waiting or pelakon?
* Does his alleged presence at the crime scene close the loop on speculated involvement of the military or confirm that it was a police-military joint ops against a dangerous foreign enemy force of one?

Norhayati
* Is she RPK's source?

Dato Seri Najib Razak
* Decisions being made for him again?
* Is he shitting bricks?

Pak Lah/PLSIL
* If the RPK SD is true, withholding the Military Intelligence report would mean complicity wouldn't it?
* Are they shitting bricks?

The Police/Military
* This is khidmat untuk negara right?

Mainstream Media
* Why the deafening silence?

The AG Chambers/Judiciary
* In light of RPK's SD and his To Hell Campaign, the way the Altantuya murder trial is being conducted (against the background of the so-called judiciary reform efforts by the government), do we conclude that judiciary independence is just an illusion?
* AG Chambers; only 3 people involved?
*In view of RPK's coming sedition trial is this sub judice?

*********************************************************************************
Questions, questions, questions. The real answers are already there but which version will Joe Public get? Yes, these are sleepless days indeed for some. To the guilty, these sleepless nightmare days are already hellish and RPK has actually succeeded in his mission.

Thursday, 19 June 2008

It's The Bloody Speculators!!

This was in The Star paper on Saturday, 14th June 2008.


Saturday June 14, 2008

Potential puncture in the oil bubble

by S.DALI

ACCORDING to Shell Oil president John Hofmeister, the “proper” range for oil should be somewhere between US$35 - US$90 a barrel.

Based on that statement and assuming it’s more or less accurate, what do you think we should make of the current oil price of US$130 - US$140 per barrel? How much of the spectacular rise in oil is due to speculation? That is important to determine as excessive speculation could basically drive prices much higher than its real demand-supply equilibrium.

Open interest in WTI oil futures has been growing exponentially at 18% per annum since 2001, thanks to the entry of non-commercial players. The entry of more non-commercial players and speculators generally mean they would be on the long-side of the futures and options.
Speculation stands out as the biggest culprit for the oil price boom.

Many reasons are being cited for the oil price boom – speculation, fundamentals, dollar weakness, fuel subsidies, inflation, low interest rates. All factors are playing a part at some time or another, with different factors dominating at various times.

But one factor stands out as the biggest culprit – SPECULATION.

Spike in speculation

According to Michael Masters, index speculators are the primary cause of the recent price spikes in commodities.

This is not selective information to back my view as he heads a highly respected fund management company – Masters Capital Management.

He recently (May 20, to be exact) delivered a testimony before the Permanent committee on “Investigations committee on homeland security and governmental affairs” to the US Senate. Hence his testimony carries a lot of weight.

Masters talked about the resurgence of several groups over the past five years who he deemed as newcomers to the “commodity speculation scene”. They are corporate and government pension funds, sovereign wealth funds, university endowment funds and other institutional investors. Collectively, they constitute the largest share of outstanding commodities futures contracts than any other group.

Masters refers to them as “index speculators” because they distribute their allocation of dollars across 25 key commodities futures according to popular indices, namely the S&P Goldman Sachs Commodity Index and Dow Jones AIG Commodity Index.

The rising interest in commodities was largely based on the assumption that historically, commodities have no correlation to fixed income and equities. It has to be noted however that while previously the futures market may have been relatively “not big enough” to provide this kind of diversification, this has not been the case over the last 10 years.

As at end 2003, assets allocated to commodity index trading stood at a whopping US$13bil. As of March 2008, that figure has ballooned to US$260bil!

Obviously, something highly significant has happened here with equally significant consequences.

The culprits

Some political leaders have pointed their fingers at speculators as the primary culprits for driving oil price by more than 50% over the last 12 months alone. In my opinion, they are correct, partially.

The new index speculators are not your average in-and-out trading outfits. Collectively, these funds have stockpiled (long on inventory via the futures market) 1.1 billion barrels of petroleum. It’s not like they are actually going to take delivery of these oil barrels, but their stockpiling is tantamount to hoarding 1.1 billion barrels from the real market place. If real supply is constant, one can imagine what the 1.1 billion long positions will do to oil futures prices if they are rolled over.

Apart from index speculators, a huge number of long-only commodity funds and plethora of dedicated commodity ETFs have entered the scene in the past five years. A quick glance at Nasdaq will be able to give you an idea on the rising emergence of ETFs.

Essentially, they are long players, trying to cash in on investors interest on a prolonged commodity bull run.

But are they really interested to consume these commodities? NO.

Joining the bandwagon

Lending a great deal of support to index speculators are, unsurprisingly, investment banks. Swaps loophole exempts investment banks like Goldman Sachs and Merrill Lynch from reporting requirements and limits on trading positions.

The loophole allows pension funds (or any other aforementioned funds) to enter into a swap agreement with an investment bank, which can then trade unlimited numbers of the contracts in futures markets.

Even more interesting is that the WTI crude oil futures traded on ICE in Europe are exempt from regulatory action!

ICE (Intercontinental Exchange) operates global commodity and financial products including the world’s leading electronic energy markets and soft commodity exchange.

Amidst all these hoopla, it would appear that Opec, which is traditionally everyone’s punching bag, is probably an innocent party to this catastrophe, this time around.

According to market estimates, the actual costs incurred in producing the most expensive oil is only around US$70-US$80 a barrel; the rest of the current oil price represents the market’s risk premium plus speculation.

Note, that assumption is based on the high end of the cost spectrum and most are produced at a much lower cost.

Rising trend

You have heard this before: according to the DOE, annual Chinese demand for petroleum has increased over the last five years from 1.88 billion barrels to 2.8 billion barrels – an increase of 920 million barrels.

Over the same period, Index Speculators demand for petroleum futures has increased by 848 million barrels. The increase in demand from Index Speculators is almost equal to the increase in demand from China!

Bearing in mind that commodity futures markets are much smaller than capital markets, these substantive funds will have a far greater impact on commodity prices.

In 2004, the total value of futures contract outstanding for all 25 index commodities was US$180bil. In 2004, index speculators poured in US$25bil into these markets – a significant 14%.

It would be safe to assume that the sums being ploughed into the commodity futures markets in the ensuing years to present is much higher.

Rising trend means index speculators are making a lot of money. The run attracts momentum players. Typically, rather than take their profits and run, index speculators tend to stay on because the allocation is a diversification bet not a straight out investing bet. They are more likely to reinvest their compounded gains and even more due to profit-motivated demand thinking.

Psyche of speculators

Index speculators are different from traditional speculators.

The latter will trade, take their profits and run. The former prefers to keep the long position and generally, never sell. Instead of providing liquidity, index speculators are actually draining liquidity. Even if Opec promises to release more oil now, it would probably not dent the rally by much.

If index speculators weren’t a group but an individual, regulators would be on his back like a hawk and he’d be hauled up for attempting to corner a market.

Masters highlighted to the US Senate that it is most important to close the loophole in the Commodity Exchange Act 1936 which exempt investment banks from speculative position limits when these banks hedge OTC swaps transactions.

According to Masters, almost 90% of index speculators effectively enter into commodity index swaps and face no limits on their positions.

To puncture the oil price bubble, and yes, it is a bubble, Masters recommended that pension funds be forbidden from using commodity index replication strategies.

He added that the swaps loophole should be plugged immediately, thus causing all speculators to face position limits.

In all likelihood, if the recommendations put forth by Masters or moves similar to that are put into action, the oil price bubble may be punctured.

Judging from market developments in recent weeks, it may be wrong to assume that “nothing will be done” by the US lawmakers soon.

We will find out – very soon.

Wednesday, 18 June 2008

A Nightmare For The US?

My friend N. Taib sent me this interesting article that makes lots of sense to a layman like me. It has probably appeared in Malaysiakini or Malaysia Today but I think it is worth reproducing here. Conservative Ahmadinejad's way of sticking it up neo-conservative Bush's arse? How much has this to do with recent drastic oil price increases since we are told there is no shortage of oil? Read on...

A Nightmare for the US

The Voice (issue 264 - 11th May) ran an article beginning, 'Iran has really gone and done it now. No, they haven't sent their first nuclear sub in to the Persian Gulf. They are about to launch something much more deadly -- next week the Iran Bourse will open to trade oil, not in dollars but in Euros' This apparently insignificant event has consequences far greater for the US people, indeed all for us all, than is imaginable.

Currently almost all oil buying and selling is in US-dollars through exchanges in London and New York. It is not accidental they are both US-owned.

The Wall Street crash in 1929 sparked off global depression and World War II. During that war the US supplied provisions and munitions to all its allies, refusing currency and demanding gold payments in exchange.

By 1945, 80% of the world's gold was sitting in US vaults. The dollar became the one undisputed global reserve currency -- it was treated world-wide as `safer than gold'. The Bretton Woods agreement was established.

The US took full advantage over the next decades and printed dollars like there was no tomorrow. The US exported many mountains of dollars, paying for ever-increasing amounts of commodities, tax cuts for the rich, many wars abroad, mercenaries, spies and politicians the world over. You see, this did not affect inflation at home! The US got it all for free! Well, maybe for a forest or two.

Over subsequent decades the world's vaults bulged at the seams and more and more vaults were built, just for US dollars. Each year, the US spends many more dollars abroad that at home. Analysts pretty much agree that outside the US , of the savings, or reserves, of all other countries, in gold and all currencies -- that a massive 66% of this total wealth is in US dollars!

In 1971 several countries simultaneously tried to sell a small portion of their dollars to the US for gold. Krassimir Petrov, (Ph. D. in Economics at Ohio University) recently wrote, 'The US Government defaulted on its payment on August 15, 1971 . While popular spin told the story of `severing the link between the dollar and gold', in reality the denial to pay back in gold was an act of bankruptcy by the US Government.' The 1945 Bretton Woods agreement was unilaterally smashed.

The dollar and US economy were on a precipice resembling Germany in 1929. The US now had to find a way for the rest of the world to believe and have faith in the paper dollar. The solution was in oil, in the petrodollar. The US viciously bullied first Saudi Arabia and then OPEC to sell oil for dollars only -- it worked, the dollar was saved. Now countries had to keep dollars to buy much needed oil. And the US could buy oil all over the world, free of charge. What a Houdini for the US! Oil replaced gold as the new foundation to stop the paper dollar sinking.

Since 1971, the US printed even more mountains of dollars to spend abroad. The trade deficit grew and grew. The US sucked-in much of the world's products for next to nothing. More vaults were built.

Expert, Cóilínn Nunan, wrote in 2003, 'The dollar is the de facto world reserve currency: the US currency accounts for approximately two thirds of all official exchange reserves. More than four-fifths of all foreign exchange transactions and half of all world exports are denominated in dollars. In addition, all IMF loans are denominated in dollars.'

Dr Bulent Gukay of Keele University recently wrote, 'This system of the US dollar acting as global reserve currency in oil trade keeps the demand for the dollar `artificially' high. This enables the US to carry out printing dollars at the price of next to nothing to fund increased military spending and consumer spending on imports. There is no theoretical limit to the amount of dollars that can be printed. As long as the US has no serious challengers, and the other states have confidence in the US dollar, the system functions.'

Until recently, the US-dollar has been safe. However, since 1990 Western Europe has been busy growing, swallowing up central and Eastern Europe . French and German bosses were jealous of the US ability to buy goods and people the world over for nothing. They wanted a slice of the free cake too. Further, they now had the power and established the euro in late 1999 against massive US-inspired opposition across Europe , especially from Britain - paid for in dollars of course. But the euro succeeded.

Only months after the euro-launch, Saddam's Iraq announced it was switching from selling oil in dollars only, to euros only -- breaking the OPEC agreement. Iran , Russia , Venezuela , Libya , all began talking openly of switching too -- were the floodgates about to be opened?

Then aeroplanes flew into the twin-towers in September 2001. Was this another Houdini chance to save the US (petro)dollar and the biggest financial/economic crash in history? War preparations began in the US. But first war-fever had to be created -- and truth was the first casualty. Other oil producing countries watched-on. In 2000 Iraq began selling oil in euros. In 2002, Iraq changed all their petro-dollars in their vaults into euros. A few months later, the US began their invasion of Iraq .

The whole world was watching: very few aware that the US was engaging in the first oil currency, or petrodollar war. After the invasion of Iraq in March 2003, remember, the US secured oil areas first. Their first sales in August were, of course, in dollars, again. The only government building in Baghdad not bombed was the Oil Ministry! It does not matter how many people are murdered -- for the US , the petrodollar must be saved as the only way to buy and sell oil -- otherwise the US economy will crash, and much more besides.

In early 2003, Hugo Chavez, President of Venezuela talked openly of selling half of its oil in euros (the other half is bought by the US). On 12 April 2003, the US-supported business leaders and some generals in Venezuela kidnapped Chavez and attempted a coup. The masses rose against this and the Army followed suit. The coup failed. This was bad for the US .

In November 2000 the euro/dollar was at $0.82 dollars, its lowest ever, and still diving, but when Iraq started selling oil in euros, the euro dive was halted. In April 2002 senior OPEC reps talked about trading in euros and the euro shot up. In June 2003 the US occupiers of Iraq switched trading back to dollars and the euro fell against the dollar again. In August 2003 Iran starts to sell oil in euros to some European countries and the euro rises sharply. In the winter of 2003-4 Russian and OPEC politicians talked seriously of switching oil/gas sales to the euro and the euro rose. In February 2004 OPEC met and made no decision to turn to the euro -- and yes, the euro fell against the dollar. In June 2004 Iran announced it would build an oil bourse to rival London and New York , and again, the euro rose. The euro stands at $1.27 and has been climbing of late.

But matters this month became far, far worse for the US dollar. On 5th May Iran registered its own Oil Bourse, the IOB. Not only are they now selling oil in euros from abroad -- they have established an actual Oil Bourse, a global trading centre for all countries to buy and sell their oil!

In Chavez's recent visit to London ; he talked openly about supporting the Iranian Oil Bourse, and selling oil in euros. When asked in London about the new arms embargo imposed by the US against Venezuela, Chavez prophetically dismissed the US as 'a paper tiger'.

Currently, almost all the world's oil is sold on either the NYMEX, New York Mercantile Exchange, or the IPE, London's International Petroleum Exchange. Both are owned by US citizens and both sell and buy only in US dollars. The success of the Iran Oil Bourse makes sense to Europe, which buys 70% of Iran 's oil. It makes sense for Russia , which sells 66% of its oil to Europe . But worse for the US , China and India have already stated they are very interested in the new Iranian Oil Bourse.

If there is a tactical-nuclear strike on - deja-vu - `weapons of mass destruction' in Iran, who would bet against a certain Oil Exchange and more, being bombed too?

And worse for Bush. It makes sense for Europe , China , India and Japan-- as well as all the other countries mentioned above -- to buy and sell oil in Euro's. They will certainly have to stock-up on euros now, and they will sell dollars to do so. The euro is far more stable than the debt-ridden dollar. The IMF has recently highlighted US economic difficulties and the trade deficit strangling the US-- there is no way out.

The problem for so many countries now is how to get rid of their vaults full of dollars, before it crashes? And the US has bullied so many countries for so many decades around the world, that many will see a chance to kick the bully back. The US cannot accept even 5% of the world's dollars -- it would crash the US economy dragging much of the world with it, especially Britain .

To survive, as the Scottish Socialist Voice article stated, 'the US, needs to generate a trade surplus to get out of this one. Problem is it can't.' This is spot on. To do that they must force US workers into near slavery, to get paid less than Chinese or Indian workers. We all know that this will not happen.

What will happen in the US ? Chaos for sure. Maybe a workers revolution, but looking at the situation as it is now, it is more likely to be a re-run of Germany post-1929, and some form of extreme-right mass movement will emerge.

Does Europe and China/Asia have the economic independence and strength to stop the whole world's economies collapsing with the US? Their vaults are full to the brim with dollars.

The US has to find a way to pay for its dollar-imperialist exploitation of the world since 1945. Somehow, eventually, it has to account for every dollar in every vault in the world.

Bombing Iran could backfire tremendously. It would bring Iran openly into the war in Iraq , behind the Shiite majority. The US cannot cope even now with the much smaller Iraqi insurgency. Perhaps the US will feed into the Sunni v Shiite conflict and turn it into a wider Middle-East civil-war. However, this is so dangerous for global oil supplies. Further, they know that this would be temporary, as some country somewhere else, will establish a euro-oil-exchange, perhaps in Brussels .

There is one `solution' -- scrap the dollar and print a whole new currency for the US . This will destroy 66% of the rest of the world's savings/reserves in one swoop. Imagine the implications? Such are the desperate things now swimming around heads in the White House, Wall Street and Pentagon.

Another is to do as Germany did, just before invading Poland in 1938. The Nazis filmed a mock Polish Army attack on Germany , to win hearts and minds at home. But again, this is a finger in the dam. So, how is the US going to escape this time? The only global arena of total superiority left is military. Who knows what horrors lie ahead. A new world war is one tool by which the US could discipline its `allies' into keeping the dollar in their vaults.

The task of socialists today is to explain to as may as possible, especially our class, that the coming crisis belongs purely to capitalism and (dollar) imperialism. Not people of other cultures, not Islam, not the axis of evil or their so-called WMDs. Their system alone is to blame.

The new Iranian Oil Bourse, the IOB, is situated in a new building on the free-trade-zone island of Kish, in the Persian Gulf. It's computers and software are all set to go. The IOB was supposed to be up and running last March, but many pressures forced a postponement. Where the pressure came from is obvious. It was internationally registered on 5th May and supposed to open mid-May, but its opening was put off, some saying the oil-mafia was involved, along with much international pressure. Just google `pertroeuro', and the story lies before you.

From now on, anyone in the know will wake up every morning and, even before coffee, will check out the latest exchange rate between the euro and dollar.

***************************************************************

This was in today's The Star paper:


Market full of oil, price trend "fake" - Ahmadinejad
By Hashem Kalentari


ISFAHAN, Iran (Reuters) - The oil market is plentifully supplied and the rally to record high prices is "fake and imposed", Iran's president said on Tuesday, blaming a weak U.S. dollar which he suggested was being pushed lower on purpose.

Iranian President Mahmoud Ahmadinejad speaks at the opening ceremony of the 29th Annual Session of the OPEC Ministerial Council in Isfahan 450 km south of Tehran June 17, 2008. (REUTERS/Morteza Nikoubazl)

"At a time when the growth of consumption is lower than the growth of production and the market is full of oil, prices are rising and this trend is completely fake and imposed," Mahmoud Ahmadinejad said.

"It is very clear that visible and invisible hands are controlling prices in a fake way with political and economic aims," he said when opening a meeting of the OPEC Fund for International Development in the central city of Isfahan.

With high fuel prices sparking protests worldwide, Ahmadinejad hit out at energy taxes in consumer nations. He said there was an "unfair" difference in income between energy exporting and importing countries.

Iran, the world's fourth-largest oil exporter, has repeatedly said the market is well-supplied with crude and blames rising prices on speculation, a weak dollar and geopolitical factors.

Oil steadied on Tuesday after touching a record near $140 the previous day, with traders caught between a weaker dollar and expectations that top exporter Saudi Arabia will ramp up output to its highest rate in decades.

Iran has often said it sees no need for the Organization of the Petroleum Exporting Countries (OPEC) to boost output, as the United States and other big oil consumers want.

"As you know the decrease in the dollar's value and the increase in energy prices are two sides of the same coin which are being introduced as factors behind the recent instability," Ahmadinejad said.

"EVER-INCREASING DECREASE"

The president reiterated his view that oil should be sold in a basket of currencies rather than dollars, an idea which has failed to win over other OPEC members, except Venezuela.

"The ever-increasing decrease in the dollar's value is one of the world's major problems," he said.

"A combination of the world's valid currencies should become a basis for oil transactions or (OPEC) member countries should determine a new currency for oil transactions," he said.

He expressed support for a proposal by Venezuela's anti-U.S. President Hugo Chavez to create a bank constituted by OPEC members to act as a counterweight to U.S. influence in the world. He also advocated the establishment of an oil bourse.

Iran, embroiled in a standoff with the West over its nuclear programme, has for more than two years been increasing its sales of oil for currencies other than the dollar, saying the weak U.S. unit is eroding its purchasing power.

Ahmadinejad, who has called the dollar a "worthless piece of paper", suggested a part of its decline was deliberate, without naming any country:

"The planners for some big powers are acting to decrease the dollar's value," he said. "For years they imposed inflation and their own economic problems on other nations by injecting the dollar without any support to the global economy."

Foes since Iran's 1979 Islamic revolution, Tehran and Washington are also at odds over Tehran's disputed nuclear activities. Iran says its atomic work is peaceful.

(Reporting by Zahra Hosseinian in Tehran; Writing by Fredrik Dahl; Editing by William Hardy) Copyright © 2008 Reuters

Thursday, 12 June 2008

Suffer the children ... of some

I like Azmi Sharom's writings. This was in today's The Star newspaper and he puts in perspective, the so-called cutbacks in Ministerial perks.

NEW WORLD
By AZMI SHAROM

Without exotic foreign holidays, life will no longer be the same.

The sun was setting as the Proton Perdana crunched up the gravel driveway of the bungalow on Jalan Kia Peng. The man sitting in the back seat was oblivious to the gentle glow of dusk that bathed the large well-manicured gardens.

His heart felt heavy and his stomach was knotted.

He was going to break their hearts and there was no way out.

“We are here, sir.”

The voice of the driver shook him out of his deep thoughts. With a barely audible grunt of thanks, he stepped out and with leaden feet walked towards the door.

Before he reached it, the huge oak edifices swung open. A small woman in a blue uniform retrieved his suitcase and collected his shoes as he slipped them off. He hardly noticed her, either.

From within the house, there were sounds of a loud X Box game in progress and young children shouting. The man walked into the living room. Expensive Italian furniture was arranged around a 40-inch plasma TV, its sleek modernity a stark contrast to the gaudiness of the sofas and armchairs.

A boy and a girl were transfixed by the screen, watching monsters get beheaded. A woman lounged in an armchair, her diamonds glittering.

“Listen, everybody, I must speak to you,” said the man.

“Not now, Papa, we are reaching level five,” said the boy.

“No, now,” said the man.

The sombre tone of his voice cut through the shrill screams from the video game. The children and the woman looked to the man, their normal indifference suddenly replaced by unfamiliar concern.

Seating himself, the man leaned on his elbows and stared at the floor.
In a voice quivering with barely suppressed emotion, he started to speak.

“Darling, children, I am afraid we can’t go to Orlando Disneyland this year.”

“Where are we going then?” asked the girl. “England? Europe?”

“We can only go to somewhere in Asean.”

The gasps from the family just about drowned out the crack in his voice as he finished his sentence. Then the barrage of questions started. Why? What happened? How can this be?
As the voices rose to a crescendo, the man snapped, tears running down his face as he screamed,


“The oil price has gone up and we can’t go on holidays around the world any more!”

“But, darling,” said the woman, “I already told the girls I would bring back for them oranges from Florida. How can I face them in Carcosa at our high tea tomorrow?”

“Papa, you promised Disneyland. I hate you! I hate you!” shrieked the boy as he stormed out of the room.

“Wait, boy!” he called out. “You must try to understand. The whole nation is suffering. We must make sacrifices. It is for the good of the country and for the future.”

But it was too late; the boy had already disappeared into his bedroom. Soon, the sound of heavy rap played at full volume could be heard.

“Oh, darling. Think about the children. How are they going to face their friends at the international school? Where are we going to go on holiday?”

The man wiped away his tears of frustration and held his head as he thought of what to say.

Suddenly, he looked up and with a smile bordering on the maniacal, he said: “What about Singapore? Or we can even go local. Let’s go to A Famosa in Malacca. It’s fun, they have a theme park and an animal and cowboy show. Malaysia Truly Asia! Heh heh heh ...”

His laugh petered out as the girl and the woman stared at him icily, slicing through his forced jollity.

For the longest while, nothing was said. Then the rap music abruptly stopped. The three looked up as the boy walked back to them.

“I understand sacrifice, Papa. And I think I have the solution,” he said.

The family stared at him, hope shining in their eyes. “We can all go to Hong Kong Disneyland!” he exclaimed excitedly.

The man broke down again and buried his face in his hands. Between his gasping sobs, he cried,
“Oh, my son, my poor, poor boy. Don’t you know? Hong Kong is not in Asean.”

“Arrrgghhh!” the boy screamed and ran back to his room, wailing, “I hate you! I hate my life! I want to die!”

The girl, unable to bear the pain any longer, stood up. She loomed over the broken shell that was her father and said, “I know we all have to suffer because of the oil price, Papa. But why do WE have to suffer SO MUCH?” Then she too stalked away.

The man stared into the middle distance.

His pain was almost too much to endure. The only sound in the room was the clinking of his wife’s diamonds as her bosom heaved with racking sobs.

It barely smothered the sound of his shattering heart, for without their exotic foreign holidays, life would never be the same again.

*********************************************************************
Patrick Teoh is more direct in his NIAMAH!!! blog dated 10th June regarding the same.

Well thank you all over the place!

Abdullah Badawi has just announced that as part of efforts to offset the recent fuel price increase government leaders will be leading by example, by slashing expenditure . Measures that will lighten the burden on the people. Or so the P.M. and his people claim. The money would go towards expanding the social safety net for the poor and lower-income group he announced.

"All parties must now be prudent and find ways to reduce expenditure, including the government. The government feels the people's suffering and has decided that the country's leadership should set an example in facing this challenge," Abdullah said.

Wah! They are going to lead by example? Wah damn good man. And about bloody time too. But wait ah. Sometimes, what you think may not be what is. And in this case it sure ain't!"

All cabinet members and deputy ministers will take a 10 per cent cut in their entertainment allowances".

"..........paid holidays have also been slashed to one week a year and limited to Asean countries."

Well, thank you all over the place, Mr.Prime Minister and all our fat cat Y.B.'s. I am going to so grateful that you are not going to entertain so much now. And that you will only take one week holidays and only to ASEAN countries.

You do that while telling me and all other Malaysians to change our lifestyle, plant our own vegetables on our apartment balconies, tighten our belts and et cetera, et cetera et cetera.

Well, pardon me if I think you are talking through your southern orifice. Sir. Please don't misunderstand and try and tell me your usual P.R. department-generated crap like global price increases, how we must be prudent like other nations.

We know what the realities are. We just don't want to listen to bullshit. Like this from your deputy...."It won't be fair if only the rakyat, and not members of the administration, shoulder the burden." And so you and your kaki's try to pacify us by taking a 10% cut in your entertainment expenses?

Tell you what Pak Lah...if you really don't know what to say just....SHUT UP! Can ah?

NIAMAH!!!

Monday, 9 June 2008

Of Children & Fathers Day

Excerpt from "The Prophet" by Kahlil Gibran


Of Children....

Your children are not your children.

They are the sons and daughters of Life's longing for itself.

They come through you but not from you,

And though they are with you, yet they belong not to you.

You may give them your love but not your thoughts.

For they have their own thoughts.

You may house their bodies but not their souls,

For their souls dwell in the house of tomorrow, which you cannot visit, not even in your dreams.

You may strive to be like them, but seek not to make them like you.

For life goes not backward nor tarries with yesterday.

You are the bows from which your children as living arrows are sent forth.

The archer sees the mark upon the path of the infinite, and He bends you with His might that His arrows may go swift and far.

Let your bending in the archer's hand be for gladness;

For even as he loves the arrow that flies, so He loves also the bow that is stable.



***********************************************************************

This is Fathers Day week and I am not a father who makes any bones about needing a day in a year to celebrate fathers.

To me, a father has got to do what a father has got to do without needing any recognition for carrying responsibilities that he chose to have in the first place. As Nike puts it..."Just Do It!"

I am more inclined to think Fathers Day is about my kids as they are the reasons I am a father in the first place. Krystyn Cheah Pei Shan born in 1986 and Cheah Jie Juan (JJ) four years later are my children. And as cliché as it may sound, they are the best things that happened to Jeannie and I; we could not have wished for better children.

Jeannie and I discussed way before they were born what we wanted in a daughter and a son. In many ways they became what we talked about. We wanted them to grow up to be good people and felt the best way was to inculcate in them what we felt were the right values. We knew this could only be by continuous process of daily guidance and consistent practice of what we preached.

We also knew they were not going to have a religious upbringing (in the sense of mainstream religions) and we wanted them to have solid grounding in humanist values. With the global and local upheavals that were going on these last two decades in the name of religion, we did not want them to be confused and misguided by peer and societal pressure. Yet we wanted them to be able to blend in with society at large. We needed to equip them with independent thought.

Krystyn and JJ were brought up with love and were taught that love is never zero-sum. Nevertheless, we tried to inculcate in them a strong sense of fairplay and justice as a basis of dealing with people and situations. Jeannie showed them the meaning of compassion, generosity and respecting others. She also imbued in them a strong sense of humour and the ability to laugh at themselves.

Our children never needed to be straight-A students nor did they need to excel on the sports field or in any extra-curricular activities. But, they were expected to pass their exams and put in their best effort in anything worthwhile that they do. They know the importance of having sufficient academic and non-academic ability and qualifications to be able to compete in an increasingly competitive environment. They know we do not want them to be pushovers and taken advantage of.

They will face their own trials and tribulations, yet we cannot and would not try to live their lives for them. Just as our parents allowed us to make our own lives after adulthood almost by default, Krystyn and J.J. too would, as they come into their own.

Krystyn and J.J., the only difference today is that Mummy could not keep her promise of always being here to welcome you home any time you are hurting. She did better; by not being with us physically, the sense of her in our hearts and the memory of her provides us with our own strength to live a life worth living; a good life that is satisfying and which encompasses good conduct.


***********************************************************************

Fathers Day presents from Krystyn and J.J.















Thanks Krystyn, you are a special daughter.

















J.J. you put it so well when you said in your blog, you are not a mummy's boy but that you are Mummy's son. It is an honour for me to be your father. This present from you I think is because of the duet Mummy and I used to sing; "My Way"....mmm, "Our Way".







OUR WAY

And now, the end is near;
And so we face the final curtain.
Our friend, we'll say it clear,
We'll state our case, of which we're certain.

We've lived a life thats full.
We've traveled each and evry highway;
And more, much more than this,
We did it our way.

Regrets, we've had a few;
But then again, too few to mention.
We did what we had to do
And saw it through without exemption.

We planned each charted course;
Each careful step along the byway,
But more, much more than this,
We did it our way.

Yes, there were times, Im sure you knew
When we bit off more than we could chew.
But through it all, when there was doubt,
We ate it up and spit it out.
We faced it all and we stood tall;
And did it our way.

We've loved, we've laughed and cried.
We've had our fill; our share of losing.
And now, as tears subside,
We find it all so amusing.

To think we did all that;
And may we say - not in a shy way,
No, oh no not us,
We did it our way.

For what is a man (for what is a woman),
what has he got (what has she got)?
If not himself (herself), then he (she) has naught.
To say the things we truly feel;
And not the words of one who kneels.
The record shows we took the blows -
And did it our way!


** *********************************************************************

This Fathers Day post is also dedicated to Yi Wen, Saiful, Leah and Hui Sin.


























































Saturday, 7 June 2008

Price Hikes 4

Can we assume this is the Government's official rationale behind the fuel price increase? This is Second Finance Minister Tan Sri Nor Mohamed Yakcop's 270 sen in a interview with The Edge as reported in The Malaysian Insider.


Short-term pain for long-term certainty

KUALA LUMPUR, June 7 — If the government did not address the subsidy issue head-on, the government’s coffers would have been stretched to a dangerous level. The country’s budget deficit would have grown from 3.1 per cent to 6 per cent and some RM28 billion would have had to be set aside to keep pump prices low.

This scenario was sketched by Second Finance Minister Tan Sri Nor Mohamed Yakcop. He defended the decision by the administration to allow fuel prices to increase by 40 per cent under its revised subsidy scheme.

“We all have to share the burden of higher oil prices. Every country is facing it, and we have to adjust … all of us — businessmen, individuals — will have to adjust to higher prices. It is with a heavy heart that we came out with this major move and implemented these very significant measures. All things considered, we thought that this was the most optimal way to move forward.

“There will be short-term pain but there will be certainty in the medium and long term; we are creating a more efficient economy,” he said in an interview with The Edge. Below are extracts of the interview:


On the subsidy situation

The actual subsidy last year (meaning the money taken from consolidated funds and literally handed over to oil companies for the subsidy) was RM8.8 billion. This year, if nothing had been done, it would have been RM28 billion, RM20 billion more. To put the RM20 billion in context, our whole development expenditure is RM40 billion. It can only get worse over the next period. But does this RM28 billion really go to the poor? Not really. It goes to all sorts of sectors and it also encourages smuggling.

So we have to come up with a system that is sharper, that addresses the needs of the group — the lower-income group that needs help.


On the RM625 rebate

We did a simple calculation … if we assume a person travels 50km a day, his cost will go up by RM60 a month, and this is RM625 for 10 months … because the price is for 10 months, the last two months’ prices were still low, this will work out to RM62. The impact on a person who travels the 50km a day would be neutral as far as the increase is concerned. If he travels less, he is better off. If he travels more, he will be slightly worse off.


On the possibility of reducing income tax to lighten the burden on Malaysians

We have 10.5 million workers, of whom only 1.2 million pay income tax. Anyone earning RM3,000 and lower does not have to pay tax. You see so many rich people around and you would expect of the 1.2 million, many of them will pay the highest rate of 28 per cent. Do you know how many pay 28 per cent? 38,500.


On how the savings of RM13.7 billion will be spent

The money goes into a pool … Basically it’s a consolidated fund, whatever money that we save, the RM13.7 billion that we save, we have to use it for high priority development projects, including food.


On what would have happened to the budget deficit if the subsidy system had not been addressed

Our estimate is 6 per cent, if we don’t address it. If it goes 6 per cent or higher, our sovereign rating would have been affected. The cost of borrowing would be much higher. The investments into the country will be affected because people do look at the rating of the country before they invest.

You also lose complete freedom on fiscal stimulation if there is a major crisis in the world. If you are already at 10 per cent deficit, then how much more can you spend your way out? For these reasons, it will be a major disaster if the deficit climbs further.


On saving for future generations

The government today is responsible for the people today and for future generations. That is why we find it so sad that there are people arguing, why don’t we just use the Petronas money and give it away?

We can do more — sell Petronas and distribute the money. But that would be irresponsible because Petronas’ resources are finite … There is also the need to transfer wealth from this generation to the next. We think that to live happily, eat, drink and be merry because tomorrow you may die is not the right philosophy.

Price Hikes 3

I think this post by blogger Hantulaut stating his 270 sen worth is most interesting compared to earlier comments I have come across.


Mahathir's Crude Calculation Of Crude Oil
Hantu Laut

Subsidising the costs of petrol and diesel are no more feasible due to the high costs of crude oil. Continuing doing so would eventually take the nation to the road of insolvency. The price hike announced by the Prime Minister recently would also put a brake on smuggling that have rendered the nation massive economic losses.

People like Anwar Ibrahim, estranged former Prime Minister Mahathir Mohammad and Pakatan Rakyat have vested interests to demonise Prime Minister Abdullah Ahmad Badawi. They should not be looked upon as guardian angels. They are the demolition squads.

Anwar wanted Pakatan Rakyat to take over the government and he takes the post of prime minister. Mahathir has an axe to grind with Abdullah for the shelving of his vision of grandeur. Mukhriz Mahathir has lost his sense of balance and had become a chip of the old bloke.

Put any of them to run the government under the present situation you would see the same scenario. Their incessant barkings are now becoming a source of annoyance and an insult to the intelligentsia.

It is amusing to note that an article on comments made by Mahathir in his blog on the recent price hike of petrol and diesel appeared in Malaysiakini penned by one Syed Jaymal Zahiid. Malaysiakini appended a table on the price of petrol in other oil producing countries without doing an analysis and rendering of the different economic and social structures of those countries in comparison with Malaysia. The table from the said article is reproduced below:

Looking at the prices in the table any laymen would immediately conclude that the Malaysian government was wrong and could well afford togive the people cheaper price for petrol and diesel because we are oil producing nation. The purpose of the table is to mislead those who has no grasp of economics.

The writer and Malaysiakini should have shown some semblance of responsibility to explain the purpose of the table.

Malaysia is not in the same league as those OPEC countries mentioned in the table. Crude oil is not the staple food (product) of Malaysia. Our domestic consumption of oil is almost 78% of our production capacity. We are a minuscule net exporter of crude oil.

Let's take Venezuela, which has the same population as Malaysia. It produces 2.8 million barrels per day and exports 2.2 million bbl per day and consumes only 599,000, bbl per day. Its economy depended solely on export of crude oil. Almost 90% of its export earnings came from export of crude. It has the lowest price for fuel oil among OPEC members, an unimaginable amount of RM0.16 per litre.

President Hugo Chavez is doing what Mahathir has been doing for the 22 years he was in power. Instead of making strong effort to raise the income level and living standards of the people, he pampered them with all kind of subsidies just to keep himself in power. The Malaysians' mindsets are now tuned to the Mahathir's subsidy mentality.

Let us now take the other end of the spectrum, UAE (United Arab Emirates) with a small population of 4.6 millions. It produces 2.54 bbl/day and exports almost all of its premium crude. It imports around 137,000 bbl/day for part of its domestic consumptions. Although it could offer its people the cheapest price for petrol or even give it away free, it didn't. Its domestic price for petrol is MR1.19 per litre which is about the same price during Mahathir's time.

UAE is a forward looking nation and has diversified its economy to be not solely dependent on its crude oil export. Unlike Chavez of Venezuela, the rulers of UAE are fully secured in their seats and have successfully modernised and elevated the income level and living standards of the people.

Prime Minister wannabe Anwar Ibrahim said the price hike “wanton in size and callous in effect” and described the steepness in the price increase as unconscionable.

Anwar together with his former boss played equally damaging role to propagate a carrot and stick administration during his time in UMNO. He did nothing to stop the abuses when he was in the comfort zone. If you opposed the government you are seen as a security threat and are likely to be charged under the ISA. If you are a strong party supporter or a clever sycophant you would be rewarded with lucrative government contracts or given well-established public listed company on the platter that can make you an instant millionaire.

More shameful is Mahathir veiled attempt to mislead the people by saying that the government has the money to keep the fuel subsidy. He is either bad in mathematics or intentionally misrepresented Petronas profits.

For an ex prime minister who had 22 years experience in running the nation he should know the nitty-gritty of economics and interpretation of financial statements. As an adviser to Petronas such blatant disregard for facts and figures is inexcusable.

Writing in his blog he said “Roughly Malaysia produces 650,000 barrels of crude per day. We consume 400,000 barrels leaving 250,000 barrels to be exported. Our 250,000 barrels of export should earn us RM27 billion.

“But Petronas made a profit of well over RM70 billion, all of which belong to the government. I feel sure that maintaining the subsidy and gradually decreasing it would not hurt government finances,”"Three years ago the selling price of crude was about USD30 per barrel. Today it is USD130 – an increase of USD100. There is hardly any increase in the production cost so that the extra USD100 can be considered as pure profit.

Our 250,000 barrels of export should earn us 250,000 x 100 x 365 x 3 = RM27,375,000,000 (twenty seven billion Ringgit).

But Petronas made a profit of well over RM70 billion, all of which belong to the Government.

By all accounts the Government is flushed with money"Mahathir's above calculation is grossly misleading and most unexpected coming from someone like him, who is adviser to Petronas and one who knew the inner workings of government. The RM27 billion he calculated is gross sale not profit.

Below are details of the world prices of crude and the spot price of Malaysian Tapis for the period shown therein. Prices are not average but year end price. The annual average price would be much lower.

Year World Price US$ Malaysian Tapis US$
-------------------------------------------------------------------------
Dec 2003 28.13 32.03

Dec 2004 33.05 38.41

Dec 2005 51.73 61.97

Dec 2006 55.95 65.57

Dec 2007 89.76 98.44
-----------------------
Jan 2008 85.53 93.69

Feb 2008 95.15 104.21

Mar 2008 99.32 107.88

Apr 2008 111.03 120.88

May 2008 126.06 138.43
---------------------------------------------------------------------------

The price reached US130. bbl only in May 2008.

Assuming we take the year end price between 2003 and 2007, the price for the period would be an untrue average of US$59.28 per barrel for Malaysian Tapis Spot. Let us assume the true average was US$50.00.

Assuming Petronas produced a daily average production of 600,000 bbl/day for the period, the annual gross sale of crude would be US$50 x 365 x 600,000. = US$10.5 billion before deducting operational costs, royalty to states and taxes.

Let us work out how much Petronas make between the period Mahathir left office and Abdullah took over the helm to the end of 2007.

Annual sale of crude US$10.500
Less:5% royalty to states 0.525
-----------
9.975

Assuming all other costs were
50% of net sales 4.987
------------
Net Profit to Petronas 4.987 x 3.20 = RM15.96

Petronas annual profit attributed to export of crude oil between 2003 to 2007 was only RM15.96 billion not RM27 billion as made out by Mahathir. Petronas also generates profits from it other operations especially its LNG and refined petroleum operations. Its other profit centres are from its overseas operations in other countries. In 2005 its revenue was US$44.3 and made a net profit of US$11.6.

Petronas current crude production is in the region of 700,000 to 730,000 barrels per day. With the current high price of crude it probably can make RM60-70 billions from all its operations.

Malaysia's domestic consumption is in the region of 550,000 barrels a day and about 300,000 barrels of crude are imported to supplement the domestic needs .

It is obvious from the amount of domestic consumption which is almost 78 % of the total crude production it would be unwise to fleece Petronas to continue with the subsidy. It would be likened to "kill the goose that lays the golden egg" if the government were irresponsible and continue the subsidy just to be popular with the people.

During Mahathir's time when the price of crude was much cheaper, averaging less than US$20. per barrel , Petronas profits had been even smaller. He kept Petronas accounts a closely guarded secret.

Why did Mahathir keeps the accounts of Petronas a secret? It is obvious he didn't want Malaysians to know how the money was spent and what are the reserves left after the many bail outs of failed projects and insolvent financial institutions and financing of his grandiose projects. Petronas is also wasting money on prestigious and non-revenue generating projects such as the Petronas Philharmonic Orchestra and bankrolling the F1 races. Now he claims the government is flushed with money.

The price of crude reached its peak at the end of May but have eased slightly since then. Will the price breached the US$200 mark this year?

Much depend on how the recession set in the United States and whether there would be decline in industrial outputs there, in China, India and other industrialised countries. A deep recession in the US could trigger off a chain reaction to other countries that have huge trades with it. A prolonged global recession would certainly bring down the price of crude and other commodities due to less demand.

With the recent price hike would Abdullah be in serious trouble of losing his job?

Much depend on the loyalty of the 150 BN members of parliament. If they stay with Abdullah his position would be unshakable. No reason for them no to, as by now, they would have realised the false claims by Anwar of the 30 MPs joining Pakatan Rakyat. Many dates given by Anwar and his cohort Jefferey Kitingan had passed without any sign of those frogs making an appearance.

Anwar appears unsure whether he should stand in a by-election against the might of the BN machinery and take the risk of being trashed. He kept saying he is not in a hurry. It's now obvious why he wanted to take over the government through the backdoor. To be on the safe side he would only stand in a by election after formation of the government under the Pakatan coalition.

The chance of a back door take-over seems to be fading away as time goes by.

If he stood in a by-election and lost that would be the end of him and his Pakatan Rakyat and his dream of becoming prime minister.

Abdullah needs massive image reconstruction if he wants to stay in power. His popularity rating has slid further down after the price hike. He is in dire need of a cabinet reshuffle and should get rid of those lazy ministers who have done him more harm than good. He should disband his 4th floor academicians. They are probably better suited to give lectures in our local universities than dishing out advices to the Prime Minister. Those kiddies from Oxford and Cambridge have not shown their mantle. If they had, the Prime Minister wouldn't be in such predicament.

The recent price increase has not been given serious thought and no campaign has been carried out to bring awareness to lessen the shock to the general public. The government should have used the mass media to advertise and dish the dirt out to the people on why the nation needs to reduce the subsidy, at least for six months before the date of implementation. It is obvious his cabinet ministers and public relation officers are not doing their jobs.

After asking the people to change their lifestyle and tighten their belts the government, likewise, must now go on an austerity drive starting with the Prime Minister leading the way by example.
Abdullah should cut down his overseas trip to the absolute minimum. Flying a big private jet is a very expensive affair, where possible he and his deputy should reduce the size of their entourage and used smaller jet or take commercial flights.

Ministers and civil servants should also curtail their overseas trips unless absolutely necessary. Many jaunts overseas had been known to be paid holidays under the guise of fact finding tours or working visits.

Ministers and senior civil servants should switch over to using smaller cars to conserve fuel and reduce government spending.

There are many more things that the government could do to send the message to the people that they are equally serious in cutting costs to reduce the burden on the people.

Abdullah taking this unpopular decision should be viewed positively. It means the man is not afraid of losing his job.

With the oppositions not showing any responsibility, inciting the people to take to the streets to demonstrate, will Abdullah reverses his decision again or send the water cannons and teargas?

He has made his bed, he must now lie in it.

Friday, 6 June 2008

Price Hikes 2

Can we believe him? Or rather, do we believe him? This was Tan Sri Hassan Marican in The Star today: can Petronas go bust by 2018


Friday June 6, 2008

Petronas could go bust by 2018
By WONG SAI WAN

KUALA LUMPUR: Petronas will go bust within 10 years if all its profits are handed to the Government to continue subsidising fuel, said its president and chief executive officer Tan Sri Hassan Marican.

He warned that many national petroleum companies in the world have ceased to exist or were in financial trouble today because all their profits were taken away from them.

Speaking at a special briefing on Petronas’ contribution to the country, Hassan said that in the oil business it was important to reinvest profits in search of new technologies, reserves and continued revenue. Petronas has so far reinvested RM178.9bil of its profits.

“Petronas has played a major role by giving back a substantial amount of its profits to the Government,” he added.

At the close of its financial year in March last year, the national petroleum company had given the Government RM52.3bil in taxes, royalties and dividends which worked out to be 32% of the Federal Government’s revenue.

“Since the formation of Petronas in 1974 to last year, the company gave the Government RM335.7bil out of a total profit of RM570bil,” Hassan said.

Commenting on the fuel price increase, the Petronas boss said the corporation did not make a sen from the increase.

“All the oil companies get full market price for the petrol and diesel that they sell and the Government pay them the difference from the fixed price. This is where the subsidy comes into play,” he added.

Hassan revealed that oil companies operating in the country spent RM40bil a year in drilling and exploration works and a lot of this money wasinjected into the local economy.

Hassan also pointed out that it was now more expensive for Petronas to explore and extract oil.

“A lot of focus is placed on the high oil prices. There is very little talk about costs. The costs to explore and to drill for oil have increased by about 200% over the past three years.”

Hassan said Exxon Mobil made about US$40bil (RM130.31bil) last year, an increase of only US$1bil (RM3.26bil) from 2006, in an environment of higher crude oil prices.

“That is the world’s biggest, most efficient and most well-run oil company. Margins have eroded,” he said.

Hassan said Petronas was now “ scraping the bottom of the barrel” as far as finding and extracting oil was concerned.

Asked about criticisms that Petronas' accounts and profits were not transparent, Hassan said the corporation published a very detailed annual report which was deposited in the Parliament library.

“For all intents and purposes, Petronas is a public-listed company because we are rated by agencies like Standard and Poors, and Moody. We do not hide anything,” he added.


What would he say about the following comparison chart? Perhaps this is for our government to answer.