Call a spade a spade

Why US $ rally despite of all the condemnation of cutting rates and printing money by Bernanke-san? Many reasons but the major is because other countries fundamental begins to breakdown as they were in the denial mode much longer than the US.

When other governments realize that they are behind the curve, we may have to pay a bigger price.

(Bloomberg) Bank of England Governor Mervyn King discussed the possibility of lowering the U.K. rate to zero for the first time on Nov. 25 and said the biggest challenge he faces is renewing the flow of credit in the economy.

The ECB’s decision to accelerate the pace of rate cuts signals the governing council may be prepared to breach the 2 percent level it last reached in 2005, said Erik Nielsen, chief European economist at Goldman Sachs Inc. in London. The ECB lowered borrowing costs by 50 basis points in October and November.

Once interest rates reach zero, central bankers have to resort to other measures to stimulate the economy. Such steps may include expanding money supply and using it to finance government deficits or buying securities such as bonds or stocks, former policy maker Willem Buiter said this week.

Closer at home, Malaysia-Finance, S. Dali posted a good piece today, building on a false hope can be dangerous. I hope policy makers will wake up.

Luckily the financial market is not that complacent.

(TheEdgeDaily)KUALA LUMPUR: Malaysian stocks succumbed to selling pressure till midday as investors reacted to news on the the country's weaker export performance.

At 12.30pm, the 100-company Kuala Lumpur Composite Index (KLCI) fell 0.66% or 5.62 points to 841.24, pulled down mainly by plantation and banking stocks. Plantation entities Sime Darby Bhd fell 10 sen to RM5.05 while IOI Corp Bhd was down six sen to RM3.10. Malayan Banking Bhd and Public Bank Bhd shed five sen each to RM5.15 and RM8.15.

Across Bursa Malaysia, there were 213 decliners versus 94 gainers. A total of 115.45 million shares valued at RM205.11 million changed hands.

"The declines reflect the impact of recessions and slowdowns in key export markets, worsening conditions, and outlook of the electrical and electronics industry, as well as the plunge in the prices of major export commodities like crude oil and crude palm oil.

"Overall, the latest external trade data supports our view of a further slowdown in 2008's fourth quarter (4Q) real gross domestic product growth to 2.5% year-on-year (y-o-y) (3Q08: +4.7% y-o-y) due to the expected contractions in exports and imports of goods and services, as well as the export-oriented manufacturing sector," Aseambankers Malaysia Bhd wrote in a note today.