What If The Economy Slumps....

In the wake of the recent economical recession, I think it is time for us to realize one thing - everyone is vulnerable to these kind of economical slump. It started when banks are unable to move their trust fund, unable to settle for morgage in porperties; thus the crisis of subprime and credit which had begun last year seems to have much of its toll now. People have many name for it, "credit crunch" or "subprime crisis". Many experts earlier this year believed that the crisis might not long enough to give the impact to the rest of the globe. However, one by one bank is calling for S.O.S. sign. Coupled with the fact that the oil price had reached the record high in the middle of the year. Once in June-July it rocketted all the way to US$ 140+. The US Dollar continued to weaken against most major currencies. Earlier this year, Euro reached its record peak against the greenback. Even when they said it won't last long, we were pretty much had to endure a high oil and food prices worldwide. Due to the soaring price of fuel and food products, Malaysia's August inflation rate this year reached record 8.4%. That was the first half of the year.....

Then came the second part which proved to be extremely challenging and the real economic recession is pretty much on the verge to happen now. 

• The oil price somehow made an U-turn from the record high to slide down almost one-third of its record high to settle at the south point of US$90. Some claimed it was due to much better politically climate in the major oil field in Middle East. Some thought it maybe due to lower demand following sky-high oil price and also due to strengthening US dollar recently.
• Not only that, the subprime and credit crisis deepened. Not only that it prolonged but it had made many major giants calling for help and protection from bankruptcy. AIG, one of the biggest issurance company and Lehmans Brothers, US major powerhouse in banking are calling for help. Banks worldwide are unable to refinance their debts. The first victim due to these global financial meltdown which triggered the whole thing was The Northern Rock of England which now had their assets under the government protection. Also affected with the global meltdown are Merrill Lynch, Bradford & Bingley, Fortis and the list just goes on.... (Here for more)
  
• Iceland is on the verge to become the first "national bankruptcy" due to the global financial meltdown. All the three banks in Iceland; Glitnir, Landsbanki and Kaupthing were handed over to the Financial Supervisory Authority (government) where they were burdened by heavy debts. Iceland is in economic turnmoil, with the currency Icelandic Krona had declined severely that is only beaten by the most severe Zimbabwean dollar. Following the take-over of the three banks, 1 Krona was traded at € 340, worst ever in the history, while the inflation hit 14%!! Just today, the Icelandic Stock Exchange plungged more than 77% following three-days halt of trading!! (Here for more)
  
• The US Government passed the Emergency Economic Stabilization Act of 2008, with some US$ 700 billion will be injected into the market to allow liquidity. The British government also injected some US$ 100 billion into the market; while the Russian did the same with some US$ 36 billion into the market. When the first attempt to bring forward the plan, the stock market at first got panicked and the response was negative, The Dow Jones Index saw a massive drop of 777-points in a single day trading which is a record!! Then yesterday, the index climbed back more than 900 points. On October 10, the Dow Jones Index (US) dropped below 7900 (a 5 year low) but rebounded back more than 900 points on Monday October 13 in the "Manic Monday".
  

Considering how volatile the markets are now, there is no letdown in guard since the economical recession is on its meltdown and it hurts the financial sector badly. Fortunately, Malaysian banking system is still strong for at least now. However, we should start to consider the options and ways to survive after this. The global impact may anytime affecting the Malaysian directly. Let's hope we are not like the Icelandic for this moment. If our bank system and financial sector collapsed, imagine that you will have to pay more for your mortgage, house loan, car loan, basically every loan and saving accounts you have may evaporate fast.

Well, I think we really need to save more of our penny now. Save it for the rainy day people say. 

Don't get a house if you can't really pay the loan.

Don't drive a big car if you can't afford.

Don't eat or drink from super-duper fancy restaurant.

.....Except McDonald's restaurant that have a pretty model posing in front of their restaurant 

Don't go travel so much if you can't afford.

So, we need to change our lifestyles now!!!

In that case, no more Starbucks until further notice!!

T_T