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Conflict & disaster Economics Liberty Politics & government

[679:448] Of negative real interest rate?

Apart from Bucking the Fuckeyes, something odd came across my mind earlier.

If Malaysian nominal interest rate currently hovers around 2.7% according to Bank Negara (Interbank interest rate), as it has been for many months now while inflation for October is around 3.2% according to Business Times, then wouldn’t that mean, according to Fisher equation, Malaysia had a negative real interest rate a few weeks ago?

Something is wrong here. Am I taking the right interest rate?

Base lending rate (BLR) however is 6%, according to Maybank while ABN Amro Malaysia offers 5.5%. If BLR is the benchmark, then it’s my mistake.

Nonetheless, if indeed Malaysia had a negative real rate just a month ago, then our current capital outflow might not entirely due to the current huge rate differential between the US dollar and the Malaysian ringgit.

p/s – dirty Republicans at work. But nothing less than an ingenious political maneuvering:

House GOP Seeks Quick Veto of Iraq Pullout

By LIZ SIDOTI, Associated Press Writer 4 minutes ago

WASHINGTON – House Republicans maneuvered for swift rejection Friday of any notion of immediately pulling U.S. troops out of Iraq, sparking a nasty, sometimes personal debate over the war following a Democratic lawmaker’s own call for withdrawal.

Just a day after Rep. John Murtha (news, bio, voting record), D-Pa., stoked a surging political fire over President Bush’s Iraq policies by proposing that troops return home now, Republicans brought a measure to the House floor urging that a pullout begin immediately.

The symbolic vote was intended to fail, and furious Democrats accused the GOP of orchestrating a political stunt.

Republicans’ call for vote for an immediate withdrawal of US troop from Iraq forces Democrats into a corner with no safe way to go.

Categories
Books, essays and others Economics Photography

[642] Of RM132 will get you only three paperbacks

Remember my entry about wanting to read Burgess’ Malayan Trilogy?

Immediately after posting the entry, I left my desktop and headed straight for a bookstore at the base of Petronas Twin Towers to look for it. The books weren’t in store however and I was rather disappointed that I couldn’t find it. Right now, the internet and some obscure second-hand bookstores in Kuala Lumpur are my best bet.

However, instead of getting the trilogy, I went on a minor spending spree, spending, quite unbelievable, RM132 on three paperbacks – Burgess’ The Wanting Seed, Lewis’ Liar’s Poker and Stiglitz’s (I attended his lecture back in Michigan! w00t!) The Roaring Nineties – while I had only brought RM50 with me. Given the situation, I was forced to use my debit card.

On debit card, might I add that Malaysia really needs to upgrade its financial system, urgently. I don’t know how it’s like in Thailand or Singapore but the US is far, far up there and it makes me feels that all the economics I learned at Michigan is part of an elaborate science-fiction. No kidding.

Anyway, I used to remember that imported paperback on average cost merely RM25 back in the early 1990s. After 1997, it cost around RM30 each and now, on average, it’s RM40++.

I wasn’t familiar with Malaysian pricing at first and you could imagine that I was in shock. But then, after I silently converted MYR into USD in my mind, the prices didn’t seem to be too outrageous. In fact, this case actually almost conforms to Law of One Price. After realizing that, that shock turned into a sigh.

Still, I couldn’t quite believe that three paperbacks cost me more than a hundred buck.

After the disappointment and the shock that became a sigh, I strolled from the Twin Towers towards Jalan Ampang. To my delight, there are patches of green here and there right before the interception of Jalan Ampang and Jalan Yap Kwan Seng (I think).

Mohd Hafiz Noor Shams. Some rights reserved

At least, I don’t have to pay to enjoy a bit of green amidst Kuala Lumpur’s smog.

When I saw the fire hydrant in the middle of a green patch, I became attracted to it at once. The contrast is just remarkable, at least to my untrained eyes. And before you keep wondering why I never keep the object of interest in the middle of the photo, suffice to say that I prefer non-conventional style, whatever that’s supposed to mean.

Categories
Conflict & disaster Economics Environment

[641] Of Malaysian poultry market and bird flu

Bird flu () has now reached Europe. Less than 72 hours ago, British authority has confirmed that the parrot that died in quarantine was infected by the same bird flu that is affecting many birds in a number of countries. Closer to home, another person dies in Indonesia due to the flu. Thailand also has another confirmed death less than 24 hours ago. Malaysia () on the other hand has yet to report any death notwithstanding an earlier quarantine and culling of poultry carried out near the Malaysian-Thai border.

The thing is, in Malaysia, people are preparing for two major celebrations – Eid ul-Fitr and Deepavali. This pushes demand for poultry and chicken up and hence, the high price. What I find surprising however is that, in the light for an expected flu pandemic, prices have yet to fall. At my place near Keramat, Kuala Lumpur, prices are stuck at its ceiling, RM6 per kilogram; a dollar is currently about 3.77 ringgit. Eggs on the other hand are sold at about 26 sen (not cent!) each; I’m unaware of its ceiling though.

The ceilings are set nationwide by the Malaysian Ministry of Domestic Trade and Consumer Affairs. Some states like Sabah and Sawarak may have different ceilings. Some kind of implicit agreement between traders to not undercut each other is also apparent. However, that’s another story which I’m uninterested this time and unable to talk further given that I don’t know costs faced by chicken traders.

Back to the issue at hand, I’d expect consumers to scale back demand and hence forcing traders to lower their prices. Reason is, consumers should be worried with development surrounding bird flu worldwide and more importantly, regionally. And when consumers have certain concerns on bird flu, they’d be a bit conservative in chicken consumption. Yet, prices haven’t budged by one bit due to bird flu.

I can only think three reasons why prices have gone down yet.

One, the people have full confidence in the government. The Malaysian government has so far done a good job regarding bird flu. They were fast and decisive in that case in the state of Kelantan and this builds up credibility. Even more so when SARS and Nipah virus were successfully handled with aid from the US CDC.

Reason number two is ignorance. Ignorance, as some would say, is bliss. Some people, as unbelievable as it may seem, just couldn’t be bothered to read. Some even can’t differentiate SARS from bird flu and I suspect, many others don’t even know what the hell H5N1 is.

The third is the couldn’t care less attitude. I bet that this is the most probable case for most locals. If this is actually the case, who could blame them. Despite all the developments and the consumption level, Malaysia has yet to encounter a human case unlike Indonesia and Thailand.

Regardless, it would be very interesting to see how price and demand for chicken and other domestic fowls will react in the next few months or even years. If prices are still persistent at ceilings after a full outbreak occurs, Malaysia poises to become a few millions fewer. Needless to say, bad for the labor market but hey, who cares for the labor market, right?

p/s – read this Scientific American’s article on bird flu while you sit quietly at a corner, waiting to ride this expected pandemic out.

pp/s – just found out that there is a Bird Flu Monitor blog.

Categories
Economics Politics & government Society

[639] Of overheard in Ann Arbor

I found Overheard in Ann Arbor via Ann Arbor is Overrated and I’m lovin’ it. And wow, OIAA via AAIO. Talk about coincidence.

Somehow, that site makes me miss Ann Arbor and undergrad life even more. I’m reserving a spot for OIAA in my blogroll. It, together with AAIO, is now immortalized. Sort of. And McDonald’s sucks.

Also, this might be old but Berkeley is trying to tell Ann Arbor something

Anyway, for the sake of making the bear happy, I am neutral on the Miers nomination.

p/s – Ben Bernanke is the next Fed chairman. Who’s Bernanke? Don’t ask me.

Categories
Economics Environment

[632] Of Malaysian environmental law and inflation

Several days ago, Malaysian press highlighted a case in which a Malayan tiger was cut up into pieces and stored inside a refrigerator.

Fair use.

Tiger is an officially recognized endangered species worldwide. This killing should take any nature lover up to arms. However, what riles me up further is the weak punishment:

It is an offence to possess tiger meat and an offender could be jailed up to five years or fined up to RM15,000.

Tiger trafficking is a lucrative black-market trade as body parts of the animal could be processed into traditional medicine in countries such as Thailand and China. Each animal is said to fetch between RM20,000 and RM30,000.

I’m not sure if the possessor of the tiger carcass was indeed the poacher but if he is, imagine if he had gotten away with the prize – he will, on average, be better off.

Say there’s a 50-50 chance of being caught and getting away. Also, assume that if the person’s found guilty, then he or she will face maximum fine of RM15,000. At the same time, if he gets away, the person will receive RM20,000. RM20,000 is the lower limit of the range given by the news report.

Hence, his expected gain will be RM2,500. This might be a simple binomial model but it tells me that this particular environmental law does not sufficiently deal with environmental crime. I mean, come on. On average, a person is actually being rewarded for breaking the law.

It’s worth noting that the same scenario is applicable to the logging industry. I realize that way back in 2004.

I suspect that when most Malaysian environmental laws were first enacted, the monetary punishment was indeed high. However, the real value of the monetary penalties has been progressively eroded by inflation. In fact, I believe this is the case for Malaysian animal protection laws too.

According to Selangor chapter of Malaysian Society for the Prevention of Cruelty to Animals (SPCA), penalties for animal abuse is too low. These two cases are perfect illustration:

SPCA Calls for Harsher Penalties for Animal Abuse
Following the recent two cases brought to Court by Jabatan Haiwan Enforcement Officers (DVS), SPCA is appealing to the Courts and the Law makers and decision makers to take into account the seriousness of these cases and the inadequate penalties at present are being issued.

The first case, a Breeder in Cheras was fined RM200 for cruelty to 13 dogs, the charge was expected to be for each individual dog (i.e. 13 X RM200) and the lack of a ban of keeping animals after prosecution for cruelty means that each dog was returned to the owner to continue a life of suffering and production.

The second case, a Daschund named Tim, was chained so tightly round his neck that the chain had become embedded into the skin and a six inch wound exposed a bloody mess around his neck. The owner in this case was fined RM200 and had to spend one day in jail. The dog is to be returned to the owner. Tim is still recovering from his injury and several operations to remove the chain from his neck.

SPCA is currently running a campaign to convince the Malaysian government to amend Malaysian Animal Ordinance 1953 and introduce harsher penalties. The law was first enacted in 1953 and 52 years are definitely enough for inflation to render the law toothless.

The bottom line is that inflation cannot be ignored. Failure to recognize the inflationary impact on these set of laws will result in failure to curb environmental crime. This in the end underlines the need for lawmakers to talk in real term. But lawmakers and many others never do. I wonder why.

p/s – this person has a talent for trouble. And a talent for retardness too.

pp/s – a father names his son Oliver Google Kai as a tribute to Google.