This Week’s Question: I had an aging aunt who fell and broke her hip. She was never the same after that. Now that I’m old, myself, I’m worried about falling. What should I do about this?
Well, first of all, you can’t go around worrying about falling or you won’t be relaxed; that can lead to a fall. So, you should concentrate on employing techniques to avoid falls and then don’t let the fear take over you mind.
But a respect for the dangers of falling is justified by the statistics.
Among older adults, falls are the leading cause of injury deaths and the most common cause of nonfatal injuries and hospital admissions for trauma. Of all fall-related fractures, hip breaks cause the greatest number of deaths and lead to the most severe health problems and reduced quality of life.
As we age, the power of our senses, reflexes and coordination diminishes. Maladies and the medicines we take for them can contribute to balance problems. Then there's osteoporosis—a disease that makes bones more likely to snap.
There are many steps you can take to prevent a fall and the possibility of breaking a bone. I’m dedicating the remainder of this column to the best tips I collected from a variety of experts:
* Get your bones tested. Your doctor can prescribe medications that will make your bones harder to break.
* Regular exercise makes you stronger and keeps your joints, tendons, and ligaments flexible. Weight-bearing exercise such as walking may slow bone loss from osteoporosis.
* Alcohol impacts your reflexes and balance. Elaboration is unnecessary.
* Get up slowly from lying and sitting to avoid feeling light-headed.
* Avoid temperature extremes in your home; they can make you dizzy.
* Wear rubber-soled, low-heeled shoes.
* Always hold the handrails on stairways.
* Don't stand on a chair to get to something. Buy a “reach stick,” a grabbing tool you can find at many hardware stores.
* Clear floors where you walk.
* Never carry any package that will obstruct your view of the next step.
* Mount grab bars near toilets, tubs and showers.
* Place non-skid mats, strips, or carpet on all surfaces that may get wet, especially bathtubs and shower stalls.
* Let the soap suds go down the drain before you move around in the shower. If you are prone to falling, use a shower chair and a handheld shower attachment.
* Put night lights and light switches close to your bed.
* Use bright bulbs in your home.
* Keep your telephone near your bed. During the day, keep a portable phone with you so you won’t have to walk to answer it.
* Tack down all carpets and area rugs.
* Close cabinet doors and drawers so you won't run into them.
* When it rains or snows, consider using a cane.
* Use a shoulder bag, fanny pack, or backpack to leave hands free.
* Check curb heights before stepping down.
* When entering rooms, look for differences in floor levels.
* Insure that every room in your home has a light switch near the entrance.
* Practice balancing. Hold onto something such as a countertop and stand on one leg at a time for a minute. Gradually increase the time. Try balancing with your eyes closed. Stand on your toes, then rock back to balance on your heels. Hold each position for a count of 10.
* Be especially careful around pets.
By Fred Cicetti, The Healthy Geezer,
The Healthy Geezer column publishes each Monday on LiveScience.
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Tuesday, July 6, 2010
Insurance Need to improve fraud detection standards
By DALJIT DHESI
daljit@thestar.com.my
Insurers must adopt international best practices and share data, informationKUALA LUMPUR: Insurance fraud will continue to be a threat unless fraud-detection standards are improved and the public are made more aware of this menace.
Deputy Home Minister Datuk Lee Chee Leong said insurers must continue to improve their standards in fraud detection by adopting international best practices and share data and information relating to fraud activities among insurers.
“The regulators and law enforcers have to continuously assess the effectiveness of the law as to whether they are adequate and can at least discourage people from committing insurance fraud.
“Strong cooperation has to be extended to other jurisdictions, too, especially Asean, as organised crime operates in multiple countries and locations. With concerted effort by all parties, I am confident that this activity can be successfully minimised,” he said in his speech at the International Insurance Fraud Conference 2010 yesterday.
Datuk Lee Chee Leong ... ‘Insurance fraud pushes up the cost of everything one buys.’
He said the relevant associations and the Malaysian Insurance Institute (MII) could take the lead by educating society on the consequences of promoting insurance fraud and how they could help to combat it.
Lee said some authorities estimated the cost of insurance fraud ran as high as 10% of the total claims cost. An estimate done in the Unites States by the Coalition Against Insurance Fraud showed that the cost of insurance fraud was about US$80bil a year and this trend would keep escalating.
Insurance fraud, he said, pushed up the cost of everything one bought and used as every company that produced goods or services paid for insurance as a cost of doing business.
Phillip K.F. Fong, who is Crawford Group director for global markets-Asia Pacific and managing director for Malaysia, said based on global figures, it was estimated that about 3% to 5% of total gross premiums worldwide had an element of fraud.
He said during difficult times, as in the case of an economic downturn, the tendency for insurance fraud would be on the rise, for example, in property, household and motor-related claims.
Fong said insurers needed to upgrade their skills and improve their fraud-detection capabilities.
Phillip K.F. Fong ... ‘The insurance industry needs to be vigilant at all times.’Fong categorised fraudsters into three different types – opportunistic, repeat and organised ones. He said to have an effective fraud strategy, three golden rules should be upheld – detection (identification of high risk/suspicious claims), investigation (management and customer-focused investigation of claims once labelled “high risk”) and articulation (production of accurate management information).
Apart from making people more conscious of fradulent claims, insurers must not be publicity-shy as those who fear adverse publicity are invariably the subject of a greater proportion of dishonest claims. MII CEO Khadijah Abdullah said a more structured way of capturing information on insurance fraud was needed via cooperation from Bank Negara, insurers and other relevant parties.
Related Stories:
Insurance fraud in M'sia estimated at RM1.74bil last year
KUALA LUMPUR: Insurance fraud, estimated at RM1.74 billion in Malaysia last year, is clearly a "big business" and more alarming is, the public apathy surrounding it."This apathy at times, unfortunately, even finds its way into our criminal justice system," Deputy Minister of Home Affairs, Datuk Lee Chee Leong said on Monday.
Research on the public perception of insurance fraud concluded that on average, 30 per cent of the public respondents believed, it is acceptable to pad an insurance claim, he added.
"(Hence), there seems to be a great willingness among normally law abiding people to tolerate low levels of insurance fraud.
"However, the burden of combating such crime should not merely rest with the public sector alone, but also the private sector, particularly, the insurers themselves," Lee said in his opening remarks at the International Insurance Fraud Conference 2010, here, on Monday.
He also said that the Association of Malaysian Loss Adjusters (AMLA) and the Malaysian Insurance Institute (MII) should perhaps take the lead to educate society on the consequences of promoting insurance fraud and how they can help combat the issue.
According to the National Insurance Crime Bureau of the Unites States, fraud inflates the cost of each consumer's insurance premiums by US$200 to US$300 annually.
"Insurance fraud pushes up the cost of everything you buy and use because every company that produces goods or services, pays for insurance as a cost of doing business.
"Going forward, the insurers must also continue to improve their standards of fraud detection by adopting the international best practices and share data and information relating to fraud activities among themselves," Lee said.
Meanwhile, the MII's Chief Executive Officer, Khadijah Abdullah suggested that there should be a unified statutory body to oversee fraud in the industry and compile appropriate data.
"Currently, associations and Bank Negara Malaysia, have their own supervision over the issue but there is no single body that can help compile the information," she said. - BERNAMA
Monday, July 5, 2010
U.S.’s Startup Myth; China’s ‘Ford Moment’: Commentary Review
Job-Creation Faith Is Misplaced
Recently an acquaintance at the next table in a Palo Alto, California, restaurant introduced me to his companions: three young venture capitalists from China. They explained, with visible excitement, that they were touring promising companies in Silicon Valley. I’ve lived in the Valley a long time, and usually when I see how the region has become such a draw for global investments, I feel a little proud.
Not this time. I left the restaurant unsettled. Something didn’t add up. Bay Area unemployment is even higher than the 9.7 percent national average. Clearly, the great Silicon Valley innovation machine hasn’t been creating many jobs of late -- unless you are counting Asia, where American technology companies have been adding jobs like mad for years.
The underlying problem isn’t simply lower Asian costs. It’s our own misplaced faith in the power of startups to create U.S. jobs. Americans love the idea of the guys in the garage inventing something that changes the world. New York Times columnist Thomas L. Friedman recently encapsulated this view in a piece called “Start-Ups, Not Bailouts.” His argument: Let tired old companies that do commodity manufacturing die if they have to. If Washington really wants to create jobs, he wrote, it should back startups. (July 2)
Andy Grove
{NSN L4W13G1A1I4H <GO>}
So Far, Capitalism Rules
If these factory strikes continue, China may have to go Communist.
It’s tempting to wonder which way China will go. Will it side with demands for higher pay and let strikes broaden? Might it clamp down on this budding Solidarity-style movement to protect the all-important export machine? Or will workers demand a true Communism -- not just one that abhors Google?
So far, China has taken the first path, going more the way of capitalism than Communism. It raises the specter of a “Henry Ford moment” in the most populous nation, with both good and bad implications for the global economy.
First, the good news. China’s leaders are taking a page from the industrialist who built Ford Motor Co. In 1914, Ford doubled the average automaker’s wage to $5 a day. It made his Model T more affordable to them and provided a model for a stable workforce that formed the core of the U.S. middle class.
It’s a dynamic China needs more of, and signs are that it’s spreading before our eyes. The positive domino effect it unleashes would create a growing domestic market for products factory workers produce. It would accelerate China’s shift from exports to a consumer-led economy. (June 28)
William Pesek
{NSN L4NN5307SXKX <GO>}
Banking Bill Invites Meltdown
The financial overhaul bill set for passage sometime next week is supposed to “bring accountability to Wall Street.” In announcing an agreement between the House and Senate last week, Senator Christopher Dodd noted that “the American people have called on us to set clear rules of the road for the financial industry to prevent a repeat of the financial collapse that cost so many so dearly.”
The final bill, though, does little to prevent a systemically important bank from failing, and makes it far more difficult for regulators to assist one seeking to avoid failure. This all but insures that the system-wide calamity the bill should be trying to prevent will, in fact, occur again.
Most of the systemic risk in the U.S. is now carried in the six largest bank-holding companies (Bank of America, JPMorgan Chase, Citigroup, Wells Fargo, Goldman Sachs and Morgan Stanley). The bill lets them off easy: none is to be broken up and the effort to lower the risk they take on was diluted. (June 28)
Roy C. Smith
{NSN L4MNEP0UQVI9 <GO>}
EU Mulls Sovereign Default
The notion that default might be the only sensible exit strategy for an indebted euro nation is finally gaining traction with the authorities. With global financial markets still in a state of disrepair, investors would be wise to tread softly amid the potential nightmares.
A draft European Union document, dated June 25 and scheduled for discussion July 12-13, was obtained this week by Bloomberg reporter Meera Louis. The draft suggests the forthcoming stress tests planned for the region’s banks should assess the dangers posed by “exposures to sovereign risk.”
That’s a euphemism for asking whether banks would blow up if a government couldn’t pay its debts. Including that scenario in the analysis is an admission that the prospect of restructuring has, in the minds of the euro’s apparatchiks, moved up the scale to “possible” from “out of the question.”
On June 28, the Bank for International Settlements weighed in with its annual report. Cheery reading it is not. (July 1)
Mark Gilbert
{NSN L4U63E07SXKX <GO>}
--Editors: John LearNewscribe : get free news in real time
The Chinese economy’s secret recipe
Comment by FAN GANG
CHINA’S GDP growth this year may approach 10%. While some countries are still dealing with economic crisis or its aftermath, China’s challenge is – once again – how to manage a boom.
Thanks to decisive policy moves to pre-empt a housing bubble, the real estate market has stabilised, and further corrections are expected soon.
This is good news for China’s economy, but disappointing, perhaps, to those who assumed that the government would allow the bubble to grow bigger and bigger, eventually precipitating a crash.
Whether or not the housing correction will hit overall growth depends on how one defines “hit.” Lower asset prices may slow total investment growth and GDP, but if the slowdown is (supposedly) from 11% to 9%, China will avoid economic over-heating yet still enjoy sustainable high growth. Indeed, for China, the current annualised growth rate of 37% in housing investment is very negative. Ideally, it would slow to, say, 27% this year!
China has sustained rapid economic growth for 30 years without significant fluctuations or interruption – so far. Excluding the 1989-1990 slowdown that followed the Tiananmen crisis, average annual growth over this period was 9.45%, with a peak of 14.2% in 1994 and 2007, and a nadir of 7.6% in 1999.
While most major economies in their early stages of growth suffered crises, China’s story seems abnormal (or accidental), and has elicited periodic predictions of an “upcoming crash.” All such predictions have proved wrong, but the longer the story lasts, the more people forecast a bad end.
For me, there is nothing more abnormal about China’s unbroken pattern of growth than effective macroeconomic intervention in boom times.
To be sure, both economic development and institutional reforms may cause instability. Indeed, the type of central government inherited from the old planned economy, with its overstretched growth plans, causes fluctuations, and contributed significantly to instability in the early 1980s.
But the central government must be responsible for inflation in times of overheating, lest a bursting bubble fuel unemployment. Local governments and state-owned enterprises do not necessarily have those concerns. They want high GDP growth, without worrying much about the macroeconomic consequences.
They want to borrow as much as possible to finance ambitious investment projects, without worrying much about either repayment or inflation.
Indeed, the main cause of overheating in the early 1990s was over-borrowing by local governments. Inflation soared to 21% in 1994 – its highest level over the past 30 years – and a great deal of local debt ended up as non-performing loans, which amounted to 40% of total credits in the state banking sector in the mid-1990s.
This source of vulnerability has become less important, owing to tight restrictions imposed since the 1990s on local governments’ borrowing capacity.
Now, however, the so-called “animal spirits” of China’s first generation of entrepreneurs have become another source of overheating risk. The economy has been booming, income has been rising, and markets have been expanding: all this creates high potential for enterprises to grow; all want to seize new opportunities, and every investor wants to get rich fast.
They have been successful and, so far, have not experienced bad times. So they invest and speculate fiercely without much consideration of risk.
The relatively high inflation of the early 1990s was a warning to central government policymakers about the macroeconomic risks posed by fast growth. The bubble bursts in Japan’s economy in the early 1990s, and the South East Asian economies later in the decade, provided a neighbourly lesson to stop believing that bubbles never burst.
Since then, the central government’s policy stance has been to put brakes on the economy whenever there is a tendency toward overheating. Stringent measures were implemented in the early 1990s to reduce the money supply and stop over-investment, thereby heading off hyperinflation.
In the recent cycle, the authorities began cooling down the economy as early as 2004, when China had just emerged from the downturn caused by the SARS scare in 2003. In late-2007, when GDP growth hit 13%, the government adopted more restrictive anti-bubble policies in industries (steel, for example) and asset markets (real estate), which set the stage for an early correction.
Economic theory holds that all crises are caused by bubbles or over-heating, so if you can manage to prevent bubbles, you can prevent crises. The most important thing for “ironing out cycles” is not the stimulus policy implemented after a crash has already occurred, but to be proactive in boom times and stop bubbles in their early stages.
I am not quite sure whether all Chinese policymakers are good students of modern economics. But it seems that what they have been doing in practice happened to be better than what their counterparts in some other countries were doing – a lot on “de-regulation,” but too little on cooling things down when the economy was booming and bubbles were forming.
The problem for the world economy is that everybody remembered Keynes’ lesson about the need for countercyclical policies only when the crisis erupted, after demanding to be left alone – with no symmetric policy intervention – during the preceding boom. But managing the boom is more important, because it addresses what causes crises in the first place.
In a sense, what China has been doing seems to me to be the creation of a true “Keynesian world” – more private business and freer price competition at the micro level, and active countercyclical policy intervention at the macro level.
There may be other factors that could slow down or interrupt China’s growth. I only hope that policymakers’ vigilance will prevail (and be improved upon), enabling China’s high-growth story to continue for another 10, 20 or 30 years. – © Project Syndicate
Fan Gang is Professor of Economics at
Beijing University and the Chinese Academy of Social Sciences, director of China’s National Economic Research Institute, Secretary-General of the China Reform Foundation, and a member of the Monetary Policy Committee of the People’s Bank of China.
Thanks to decisive policy moves to pre-empt a housing bubble, the real estate market has stabilised, and further corrections are expected soon.
This is good news for China’s economy, but disappointing, perhaps, to those who assumed that the government would allow the bubble to grow bigger and bigger, eventually precipitating a crash.
Whether or not the housing correction will hit overall growth depends on how one defines “hit.” Lower asset prices may slow total investment growth and GDP, but if the slowdown is (supposedly) from 11% to 9%, China will avoid economic over-heating yet still enjoy sustainable high growth. Indeed, for China, the current annualised growth rate of 37% in housing investment is very negative. Ideally, it would slow to, say, 27% this year!
China has sustained rapid economic growth for 30 years without significant fluctuations or interruption – so far. Excluding the 1989-1990 slowdown that followed the Tiananmen crisis, average annual growth over this period was 9.45%, with a peak of 14.2% in 1994 and 2007, and a nadir of 7.6% in 1999.
While most major economies in their early stages of growth suffered crises, China’s story seems abnormal (or accidental), and has elicited periodic predictions of an “upcoming crash.” All such predictions have proved wrong, but the longer the story lasts, the more people forecast a bad end.
For me, there is nothing more abnormal about China’s unbroken pattern of growth than effective macroeconomic intervention in boom times.
To be sure, both economic development and institutional reforms may cause instability. Indeed, the type of central government inherited from the old planned economy, with its overstretched growth plans, causes fluctuations, and contributed significantly to instability in the early 1980s.
But the central government must be responsible for inflation in times of overheating, lest a bursting bubble fuel unemployment. Local governments and state-owned enterprises do not necessarily have those concerns. They want high GDP growth, without worrying much about the macroeconomic consequences.
They want to borrow as much as possible to finance ambitious investment projects, without worrying much about either repayment or inflation.
Indeed, the main cause of overheating in the early 1990s was over-borrowing by local governments. Inflation soared to 21% in 1994 – its highest level over the past 30 years – and a great deal of local debt ended up as non-performing loans, which amounted to 40% of total credits in the state banking sector in the mid-1990s.
This source of vulnerability has become less important, owing to tight restrictions imposed since the 1990s on local governments’ borrowing capacity.
Now, however, the so-called “animal spirits” of China’s first generation of entrepreneurs have become another source of overheating risk. The economy has been booming, income has been rising, and markets have been expanding: all this creates high potential for enterprises to grow; all want to seize new opportunities, and every investor wants to get rich fast.
They have been successful and, so far, have not experienced bad times. So they invest and speculate fiercely without much consideration of risk.
The relatively high inflation of the early 1990s was a warning to central government policymakers about the macroeconomic risks posed by fast growth. The bubble bursts in Japan’s economy in the early 1990s, and the South East Asian economies later in the decade, provided a neighbourly lesson to stop believing that bubbles never burst.
Since then, the central government’s policy stance has been to put brakes on the economy whenever there is a tendency toward overheating. Stringent measures were implemented in the early 1990s to reduce the money supply and stop over-investment, thereby heading off hyperinflation.
In the recent cycle, the authorities began cooling down the economy as early as 2004, when China had just emerged from the downturn caused by the SARS scare in 2003. In late-2007, when GDP growth hit 13%, the government adopted more restrictive anti-bubble policies in industries (steel, for example) and asset markets (real estate), which set the stage for an early correction.
Economic theory holds that all crises are caused by bubbles or over-heating, so if you can manage to prevent bubbles, you can prevent crises. The most important thing for “ironing out cycles” is not the stimulus policy implemented after a crash has already occurred, but to be proactive in boom times and stop bubbles in their early stages.
I am not quite sure whether all Chinese policymakers are good students of modern economics. But it seems that what they have been doing in practice happened to be better than what their counterparts in some other countries were doing – a lot on “de-regulation,” but too little on cooling things down when the economy was booming and bubbles were forming.
The problem for the world economy is that everybody remembered Keynes’ lesson about the need for countercyclical policies only when the crisis erupted, after demanding to be left alone – with no symmetric policy intervention – during the preceding boom. But managing the boom is more important, because it addresses what causes crises in the first place.
In a sense, what China has been doing seems to me to be the creation of a true “Keynesian world” – more private business and freer price competition at the micro level, and active countercyclical policy intervention at the macro level.
There may be other factors that could slow down or interrupt China’s growth. I only hope that policymakers’ vigilance will prevail (and be improved upon), enabling China’s high-growth story to continue for another 10, 20 or 30 years. – © Project Syndicate
Fan Gang is Professor of Economics at
Beijing University and the Chinese Academy of Social Sciences, director of China’s National Economic Research Institute, Secretary-General of the China Reform Foundation, and a member of the Monetary Policy Committee of the People’s Bank of China.
Migrants from new EU states increase London homeless tally
• UK capital's homeless now 4,000, from 2,500 three years ago
• Growth in new rough sleepers attributed to economic tailspin
• Growth in new rough sleepers attributed to economic tailspin
Almost a quarter of London's rough sleepers are from new EU states, a trend exacerbated by rising unemployment that is reversing a decline in homelessness in the capital, a report says .
Most of those sleeping on the streets come for a better life but many find limited opportunities, and, in some cases, become destitute. While the number of homeless British nationals in the capital has stabilised at about 2,500, citizens of the 10 central and eastern European states account for hundreds more added to the most authoritative tally of rough sleepers. The database Chain, or Combined Homeless and Information Network, which is maintained by Broadway, a homeless charity, tomorrow publishes figures showing that London ‑ the location of more than half of the country's rough sleepers ‑ has almost 4,000 homeless people, a figure up from the 2,500 listed three years ago.
The biggest single factor contributing to growth in the newly homeless is the tiny fraction of 1.5 million migrants who came in search of work from the EU's new border regions but who ended up on the streets as the economy went into a tailspin.
These people are often left to fend for themselves; unless they have worked full-time for a year, migrants from former eastern bloc countries that joined the EU in 2004 and 2007 have no right to public funds and only limited access to services. The outcome is often isolation and homelessness.
British charities say that while the tide of largescale migration from eastern Europe has largely reversed, many people are staying on thinking there is a only a limited safety net in their own country.
This assertion has been denied by Krzysztof Lisek, a Polish MEP who has helped homeless Poles in the UK. He said that if it were a question of social security then "the migrants would probably choose the Nordic countries".
Last week during a series of interviews in London where homeless people queued for breakfast provided by charities, many of those on the streets shrugged off the hardships. Most sleep outside, often on church steps. They scavenge at markets because "so much good food is thrown away", and their days are spent traipsing between shelters or begging; an hour seems to yield a less than a pound.
"You can buy a baguette after a few hours of begging," said Roman Maciejewski, a 39-year-old former hospital porter from Poznan, west Poland, who arrived this year looking for work but ended up sleeping under a tarpaulin. "It is a open air apartment by the Thames. The weather is much harder in Poland than here."
Broadway's chief executive, Howard Sinclair, said: "Clients live on bendy buses, scrounge for scraps, have to endure snow and rain. The life expectancy of a homeless person on London streets is 42. That is not something that should be happening in 21st century London."
Sinclair said that if the problem were not tackled, Boris Johnson, London's mayor, would find it "very difficult" to make good his promise that by 2013 that no one would be living on the city's streets. Unlike the government figures, which count the number on the streets on one night of the year, and which have been criticised by some homeless charities for providing only a partial snapshot of the problem, Chain tallies the homeless throughout the year.
The spurt in rough sleeping has led to some radical measures. Since June 2007 more than 1,000 eastern and central Europeans have been flown home, at taxpayer expense. Many flock to the capital's most prosperous parts; the City of London "reconnected" 130 people with their families last year.
Ewa Sadowska, chief executive of Barka UK, a project that aims to help European migrants, said that those arriving here did not realise that their own governments now helped homeless people. She said that in Poland homeless people were paid cash benefits and got free access to services in "social integration centres".
She added: "Many of the homeless come from a generation that went through communism, they are scarred and don't trust authority. They drink and find a group that behaves like them. It becomes a lifestyle, and not an easy one to get out off."
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Sunday, July 4, 2010
Internet affairs a home wrecker
By RACHAEL KAM and SEREAN LAU
newsdesk@thestar.com.my
KUALA LUMPUR: Online social networking sites can be a good place to meet new friends or even seek life partners but they have also become a breeding place for divorces.Marriage counsellor Yvonne Lee said the Internet had been cited as one of the reasons for divorces of late.
“The Internet can trigger marital problems or worsen a couple’s existing problems. It has opened up more choices for those looking for partners, regardless of whether they are single or married,” explained Lee, a premarital programme trainer at the National Population and Family Development Board in Kuala Lumpur.
Lee, a director of Enrich Counsel-ling and Therapy Centre, said that while the Internet could be one of the causes for divorce, it was still the quality of the relationship that determined the outcome of a marriage.
One in 30 new clients the centre counsels every two months has cited the Internet as one of the reasons for their marital break-up.
A victim of an “online” affair, Ann discovered that her husband, Jason, had registered himself with some foreign match-making and social networking websites to meet other women.
“I thought Jason was having an affair with a woman from China but apparently there were several of them,” she said, adding that they would exchange lurid sex talk and even nude pictures online.
Jason, an engineer, has since left his wife and two children for a married woman he befriended online.
Hillary, 33, from Kuala Lumpur, was pregnant with her third child last year when she discovered her husband’s affair with another woman, a Malaysian working in Hong Kong.
She not only found suggestive emails on his smartphone and computer but also photographs of the mistress with her husband.
Albert, a psychologist, admitted having affairs with at least six women he met on Facebook and three others on Skype before his wife found out about his infidelity and divorced him.
He had joined social networking sites to locate his former university mates and soon added anonymous women as his friends.
Sometimes, it is not the husbands who cheat.
Susan, 42, a mother of a 12-year-old girl dropped a bombshell on her husband recently — she wanted a divorce to marry a Frenchman of African origin whom she befriended on Facebook. The couple run a small retail outlet in Malacca.
Consultant psychologist Valerie Jaques said most couples who cited Internet love affairs as the reason for divorce were already facing some problems.
She added that these problems, whether physical, emotional, psychological or social in nature or a combination, could result in loneliness.
“A lonely person who receives attention via the Internet or face-to-face will be extremely vulnerable, and this can develop into a more serious relationship,” said Jaques from Integrated Psychological Network Sdn Bhd.
“People fall for nice words. Lonely people will be more vulnerable to nice but empty promises.”
Battle of the technices - Steve Jobs & Bill Gates
By JOEY YAP and TEE LIN SAY
starmag@thestar.com.my
PC vs Mac?
Both Steve Jobs and Bill Gates are highly intelligent and good at accumulating wealth - but one of them will enjoy that wealth along with good health while the other will struggle with ailment.
In the last part of our series on face reading, we examine two titans who have been battling it out in the technology arena for decades.
MICROSOFT founder Bill Gates and Apple co-founder Steve Jobs are both American magnates who command the respect of the world with the paradigm-shifting inventions their companies have developed.
Gates is almost single-handedly responsible for the revolution in personal computing, which began with the launch of the retail version of the Microsoft Windows computer operating system on Nov 20, 1985. Since 1995, he has consistently remained in the upper regions of any “richest American men” list you can think of.
This year, Gates, 55, is the second richest man listed on Forbes’ magazine’s annual list with US$53bil (RM173.84bil).
Meanwhile, Job’s US$5bil (RM16.4bil) net wealth may be nowhere close to Gates’ gold mine, but he is the ultimate icon of the idiosyncratic and individualistic Silicon Valley entrepreneur.
Battle of the techies: Both Steve Jobs and Bill Gates (below) are highly intelligent and good at accumalating wealth – but one of them will enjoy that wealth along with good health while the other will struggle with ailments. He is presently invading the world with the launch of the iPhone 4 last week, on June 24; it was the best product launch in the history of Apple Inc, according to news reports earlier this week.
Recently, Jobs predicted that personal computers running on Microsoft Windows operating systems are in permanent decline.
Does this mean it’s the end of Gates empire?
Gates’ window on the world
Based on face reading, the answer is no.
Gates’ current age point is denoted in the mouth area – and he has a big and wide mouth with good flags.
Remember what we said previously? “Bigger mouth, bigger say”. Well, Gates’ huge mouth definitely means an abundance of influence, power and respect. As a non-executive chairman, he may no longer play an active role in Microsoft now, but his reputation and clout is far from diminishing.
Bill Gates With that sort of mouth, people tend to listen to and obey him – a good thing too, because he wants things his way!
Notice too, that Gates has bell shaped laughter lines (wide and deep but shaped like a bell) – these are the best type to have because they indicate a person who commands huge respect and has huge authority. The other lines on the sides of the face that go all the way up – guan jong wen – reinforces this, as they mean mass public support.
Gates also has a classic lion’s nose, which is an entrepreneur’s nose. The nose itself is quite large, but not disproportionate to the rest of the face.
The nose wings are wide, denoting the ability to generate wealth from a variety of sources. The tip of the nose is particularly bulbous and, most importantly, dips down, indicating excellent business acumen and a sharp financial mind.
Gates nose is also well-supported by his cheeks. This denotes that he has a very good right-hand man and close aides to help him achieve his goals and support his wealth generation efforts. That is why, even with Gates taking a lesser role, you don’t see the company crumbling, or shareholders turning jittery.
His wealth is also a result of his wisdom – he has a high forehead. Gates is a thinker, one who is always analysing and strategising.
His chin is prominent and bulges out. This is an extremely important feature for people in today’s cutthroat business world. A chin like this means wealth and career positions that are established and rock steady.
In business, this means that Gates is firm in his decisions and cannot be swayed without a very good reason.
As his eyebrows do not extend across the length of his eye, they could be be regarded as short. This denotes someone who is unsentimental and merciless and who prefers to count on himself rather than depend on others. Short eyebrows belong to people who prefer to be unencumbered by partners.
His eyebrows are also straight and do not arch at all. This means someone who has a consistent personality and is focused and determined. The straightness also indicates that Gates believes in measured responses and that he likes to observe a situation before jumping in or taking action.
That is why Microsoft is not as aggressive or as “boat-rocking” as Apple in terms of its product line-ups.
While Microsoft has sometimes been slow to enter a particular area of technology, once Gates does decide to enter the fray, he will have thought out all the angles and have a clear vision of emerging victorious.
For example, Microsoft allowed the Netscape Navigator to establish itself as a browser before deciding to get into a “browser war” with its own Internet Explorer – and we all know how that ended, don’t we?
To sum it up, Gates six “mansions of wealth” position is very prominent and meaty, which means great wealth. The wealth mansion points are two points each on the forehead, the cheeks and the lower chin area.
He also has a square face, or field face character, that is very symmetrical and proportionate. This shows that Gates is of the earth element. Typically, most wealthy people have earth-shaped faces.
Gates eyes are also very strong. He has glossy and spirited eyes, which are known as “noble dragon” eyes. Couple these eyes with his lion nose, and you have a person with full power, authority and wealth.
Furthermore, his chin is squarish and long, which represents a very wealthy and prosperous old age.
Applemania is Jobs
If there’s anyone who can create a new culture, its Jobs, the co-founder (with Steve Wozniak) of Apple Inc and the man who made Pixar Studios into an Academy-award winner.
Wealth-wise, it is clear to see: Jobs has a very good nose, with wide nostrils and a downward-dipping nose bulb, indicating someone who is very savvy financially and in wealth generation.
If we compare the amount of creativity reflected in Gates and Jobs’ faces, Jobs would appear to have the superior face.
His most prominent feature is his high and broad forehead. This indicates someone who is very intelligent. Analysing and solving puzzles is second nature to him. His forehead’s width also indicates that Jobs has had plenty of opportunities throughout his career – he has helpful people and “guiding angels” to push him to excel in his field.
His forehead also indicates he has a lot of creativity, as can be seen by how he turned Apple around with ground-breaking advertising campaigns and marketing techniques. Together with his small and long eyes, these are hallmarks of a very successful entrepreneur.
Job’s thick eyebrows go upwards like a warrior, a feature usually found on heroic personalities. They are courageous, principled and intelligent and are the sort who will fight for the rights of the oppressed.
Those eyebrows also indicate that Jobs has a very positive outlook on life, hence enabling him to fight cancer (he was diagnosed with a rare form of pancreatic cancer in 2004) – and produce the best smart phone in the world, theiPhone , of course!
His protruding eyebrow bones mean he is more aggressive and will take on a more active role. He dares to stand out in the crowd and be different.
While Jobs may be better as a creative entrepreneur, Gates would be better as the leader. This is because Jobs’ sharp and long eyes indicate that he has an eye for detail. Couple this with the protruding eyebrows, and it is evident that he likes to be in control of everything.
Jobs eyes are also sharp yet sunken. Couple this with his thicker eyebrows, and it means that he knows how to find the right partner to help him. His eyebrows represent sibling and partnership palaces. He has the ability to find the right people at the right time.
Jobs also has the high-set ears that are a feature of people with high IQs.
His bulging fortune and virtue palace (the area above the eyebrows) indicates someone who is hard on himself and who is not contented because he is in constant pursuit of perfection.
That is why it is not surprising that Jobs is today listed as either primary inventor or co-inventor in over 230 awarded patents and patent applications.
Jobs, like Gates, is also 55 this year, so, similarly, his “age luck” is also in his mouth. Jobs’ mouth is wide, indicating influence and power.
However, he has been growing a scruffy sort of moustache of late that covers the fleshy part of the area above his lips – this may not be helpful.
In Mian Xiang (face reading) terms, a good face is one that is fleshy and has good qi. When a person has a fleshy face, he should not hide it under any facial hair.
Jobs has an oblong face, which is known as the “metal face” in Chinese metaphysics. Hair, on the other hand, is considered a wood element. When one has facial hair on a metal face, it is akin to “metal chopping wood”, which then creates sparks – and, hence, obstacles.
Notice, too, that Jobs has a narrower and shorter chin than Gates. This denotes a person who is more creative, but may suffer from health issues in his old age.
Jobs face is also gaunt. In face reading, hollowness and gaunt faces are never good features.
He is especially gaunt around the jaw and lower cheeks, meaning Jobs’ face does not fulfil the criteria for true wealth: when a person’s face is fleshy in all six of the mansions of wealth.
Who is doing better?
So, will Jobs survive his battle with his ongoing ill-health? He’s certainly got the determination and drive to do so. Furthermore, his eye spirit is strong, indicating that he is going through his good fortune cycle. However, the facial hair will continue to mean trials and tribulations.
Furthermore, Job’s fa-ling (laugh lines) do not cross the mouth even when he smiles. That means he will have continuing health problems before he turns 60.
To have a good life after 60, one needs deep and long fa-ling, good ear lobes and full eyebrows. Jobs ear lobes are not fleshy and while his eyebrows are strong, notice that they are sparse towards the end.
Hence, healthwise, Jobs may continue to face challenges.
Obviously, as Jobs has been single-handedly responsible for much of Apple’s success, his stepping down or demise will not be good for Apple Inc.
The fact that Apple may face challenges can be seen in Jobs’ sunken eyes (which indicate unhappiness) and bearded chin.
On the other hand, Windows will continue to flourish even without Gates. Gates has been improving with age. Gates face is meatier than Jobs’, which again shows that Gates has better fortune. To have true good fortune, one cannot be too thin.
Of course, good fortune is not just about money, it is also about health and love. So, as a whole, while Jobs may be the more creative entrepreneur and creates waves among techies worldwide, the person blessed with true good fortune – money, health and love – is Gates.
For more on face reading, drop by FemmeCity (organised by Clove) at the Kuala Lumpur Convention Centre from July 30 to Aug 1. Admission to the fair is free.
Feng shui expert Joey Yap is the founder and principal of the Mastery Academy of Chinese Metaphysics. StarBiz writer Tee Lin Say is Yap’s student of face reading.
MICROSOFT founder Bill Gates and Apple co-founder Steve Jobs are both American magnates who command the respect of the world with the paradigm-shifting inventions their companies have developed.
Gates is almost single-handedly responsible for the revolution in personal computing, which began with the launch of the retail version of the Microsoft Windows computer operating system on Nov 20, 1985. Since 1995, he has consistently remained in the upper regions of any “richest American men” list you can think of.
This year, Gates, 55, is the second richest man listed on Forbes’ magazine’s annual list with US$53bil (RM173.84bil).
Meanwhile, Job’s US$5bil (RM16.4bil) net wealth may be nowhere close to Gates’ gold mine, but he is the ultimate icon of the idiosyncratic and individualistic Silicon Valley entrepreneur.
Battle of the techies: Both Steve Jobs and Bill Gates (below) are highly intelligent and good at accumalating wealth – but one of them will enjoy that wealth along with good health while the other will struggle with ailments.Recently, Jobs predicted that personal computers running on Microsoft Windows operating systems are in permanent decline.
Does this mean it’s the end of Gates empire?
Gates’ window on the world
Based on face reading, the answer is no.
Gates’ current age point is denoted in the mouth area – and he has a big and wide mouth with good flags.
Remember what we said previously? “Bigger mouth, bigger say”. Well, Gates’ huge mouth definitely means an abundance of influence, power and respect. As a non-executive chairman, he may no longer play an active role in Microsoft now, but his reputation and clout is far from diminishing.
Bill GatesNotice too, that Gates has bell shaped laughter lines (wide and deep but shaped like a bell) – these are the best type to have because they indicate a person who commands huge respect and has huge authority. The other lines on the sides of the face that go all the way up – guan jong wen – reinforces this, as they mean mass public support.
Gates also has a classic lion’s nose, which is an entrepreneur’s nose. The nose itself is quite large, but not disproportionate to the rest of the face.
The nose wings are wide, denoting the ability to generate wealth from a variety of sources. The tip of the nose is particularly bulbous and, most importantly, dips down, indicating excellent business acumen and a sharp financial mind.
Gates nose is also well-supported by his cheeks. This denotes that he has a very good right-hand man and close aides to help him achieve his goals and support his wealth generation efforts. That is why, even with Gates taking a lesser role, you don’t see the company crumbling, or shareholders turning jittery.
His wealth is also a result of his wisdom – he has a high forehead. Gates is a thinker, one who is always analysing and strategising.
His chin is prominent and bulges out. This is an extremely important feature for people in today’s cutthroat business world. A chin like this means wealth and career positions that are established and rock steady.
In business, this means that Gates is firm in his decisions and cannot be swayed without a very good reason.
As his eyebrows do not extend across the length of his eye, they could be be regarded as short. This denotes someone who is unsentimental and merciless and who prefers to count on himself rather than depend on others. Short eyebrows belong to people who prefer to be unencumbered by partners.
His eyebrows are also straight and do not arch at all. This means someone who has a consistent personality and is focused and determined. The straightness also indicates that Gates believes in measured responses and that he likes to observe a situation before jumping in or taking action.
That is why Microsoft is not as aggressive or as “boat-rocking” as Apple in terms of its product line-ups.
While Microsoft has sometimes been slow to enter a particular area of technology, once Gates does decide to enter the fray, he will have thought out all the angles and have a clear vision of emerging victorious.
For example, Microsoft allowed the Netscape Navigator to establish itself as a browser before deciding to get into a “browser war” with its own Internet Explorer – and we all know how that ended, don’t we?
To sum it up, Gates six “mansions of wealth” position is very prominent and meaty, which means great wealth. The wealth mansion points are two points each on the forehead, the cheeks and the lower chin area.
He also has a square face, or field face character, that is very symmetrical and proportionate. This shows that Gates is of the earth element. Typically, most wealthy people have earth-shaped faces.
Gates eyes are also very strong. He has glossy and spirited eyes, which are known as “noble dragon” eyes. Couple these eyes with his lion nose, and you have a person with full power, authority and wealth.
Furthermore, his chin is squarish and long, which represents a very wealthy and prosperous old age.
Applemania is Jobs
If there’s anyone who can create a new culture, its Jobs, the co-founder (with Steve Wozniak) of Apple Inc and the man who made Pixar Studios into an Academy-award winner.
Wealth-wise, it is clear to see: Jobs has a very good nose, with wide nostrils and a downward-dipping nose bulb, indicating someone who is very savvy financially and in wealth generation.
If we compare the amount of creativity reflected in Gates and Jobs’ faces, Jobs would appear to have the superior face.
His most prominent feature is his high and broad forehead. This indicates someone who is very intelligent. Analysing and solving puzzles is second nature to him. His forehead’s width also indicates that Jobs has had plenty of opportunities throughout his career – he has helpful people and “guiding angels” to push him to excel in his field.
His forehead also indicates he has a lot of creativity, as can be seen by how he turned Apple around with ground-breaking advertising campaigns and marketing techniques. Together with his small and long eyes, these are hallmarks of a very successful entrepreneur.
Job’s thick eyebrows go upwards like a warrior, a feature usually found on heroic personalities. They are courageous, principled and intelligent and are the sort who will fight for the rights of the oppressed.
Those eyebrows also indicate that Jobs has a very positive outlook on life, hence enabling him to fight cancer (he was diagnosed with a rare form of pancreatic cancer in 2004) – and produce the best smart phone in the world, the
His protruding eyebrow bones mean he is more aggressive and will take on a more active role. He dares to stand out in the crowd and be different.
While Jobs may be better as a creative entrepreneur, Gates would be better as the leader. This is because Jobs’ sharp and long eyes indicate that he has an eye for detail. Couple this with the protruding eyebrows, and it is evident that he likes to be in control of everything.
Jobs eyes are also sharp yet sunken. Couple this with his thicker eyebrows, and it means that he knows how to find the right partner to help him. His eyebrows represent sibling and partnership palaces. He has the ability to find the right people at the right time.
Jobs also has the high-set ears that are a feature of people with high IQs.
His bulging fortune and virtue palace (the area above the eyebrows) indicates someone who is hard on himself and who is not contented because he is in constant pursuit of perfection.
That is why it is not surprising that Jobs is today listed as either primary inventor or co-inventor in over 230 awarded patents and patent applications.
Jobs, like Gates, is also 55 this year, so, similarly, his “age luck” is also in his mouth. Jobs’ mouth is wide, indicating influence and power.
However, he has been growing a scruffy sort of moustache of late that covers the fleshy part of the area above his lips – this may not be helpful.
In Mian Xiang (face reading) terms, a good face is one that is fleshy and has good qi. When a person has a fleshy face, he should not hide it under any facial hair.
Jobs has an oblong face, which is known as the “metal face” in Chinese metaphysics. Hair, on the other hand, is considered a wood element. When one has facial hair on a metal face, it is akin to “metal chopping wood”, which then creates sparks – and, hence, obstacles.
Notice, too, that Jobs has a narrower and shorter chin than Gates. This denotes a person who is more creative, but may suffer from health issues in his old age.
Jobs face is also gaunt. In face reading, hollowness and gaunt faces are never good features.
He is especially gaunt around the jaw and lower cheeks, meaning Jobs’ face does not fulfil the criteria for true wealth: when a person’s face is fleshy in all six of the mansions of wealth.
Who is doing better?
So, will Jobs survive his battle with his ongoing ill-health? He’s certainly got the determination and drive to do so. Furthermore, his eye spirit is strong, indicating that he is going through his good fortune cycle. However, the facial hair will continue to mean trials and tribulations.
Furthermore, Job’s fa-ling (laugh lines) do not cross the mouth even when he smiles. That means he will have continuing health problems before he turns 60.
To have a good life after 60, one needs deep and long fa-ling, good ear lobes and full eyebrows. Jobs ear lobes are not fleshy and while his eyebrows are strong, notice that they are sparse towards the end.
Hence, healthwise, Jobs may continue to face challenges.
Obviously, as Jobs has been single-handedly responsible for much of Apple’s success, his stepping down or demise will not be good for Apple Inc.
The fact that Apple may face challenges can be seen in Jobs’ sunken eyes (which indicate unhappiness) and bearded chin.
On the other hand, Windows will continue to flourish even without Gates. Gates has been improving with age. Gates face is meatier than Jobs’, which again shows that Gates has better fortune. To have true good fortune, one cannot be too thin.
Of course, good fortune is not just about money, it is also about health and love. So, as a whole, while Jobs may be the more creative entrepreneur and creates waves among techies worldwide, the person blessed with true good fortune – money, health and love – is Gates.
For more on face reading, drop by FemmeCity (organised by Clove) at the Kuala Lumpur Convention Centre from July 30 to Aug 1. Admission to the fair is free.
Feng shui expert Joey Yap is the founder and principal of the Mastery Academy of Chinese Metaphysics. StarBiz writer Tee Lin Say is Yap’s student of face reading.
Yuan flexibility not enough for China
What Are We To Do
By TAN SRI LIN SEE-YAN
Much to be anticipated on a gradual currency rise
MY earlier column, Realities About China’s BOP Surpluses (StarBizWeek, April 10, 2010), concluded: “exclusive focus on China’s exchange rate policy is, I think, counter-productive. It will unlikely resolve the US’s persistent imbalance. However, as I see it, there is growing awareness in Beijing that greater exchange rate flexibility and a gradual yuan appreciation has to be an element of any credible package of policy measures for China to liberalise factor markets and remove cost distortions. This could transit over time to a full market economy. Any exchange rate adjustment has to be viewed in this context.”
Sure enough, the Peoples’ Bank of China (PBoC) announced on June 19 that it would allow greater flexibility for the yuan, thereby reverting to the flexibility it had enjoyed before the yuan was effectively re-pegged at around 6.83 per US dollar in mid-2008 to provide stability during the global crisis.
In the three years following an initial 2.1% revaluation of the yuan on July 21, 2005, the currency gained a further 19%. But in those first remaining months of 2005, the appreciation was only 8.6%.
Credibility requires serious action
China’s decision to allow flexibility back into the value of the yuan was greeted with “grudging optimism”.
Few think, and rightly so, the move will have a dramatic impact on rebalancing the global economy. Partly because of its limited size.
The yuan offshore forward market on the first trading day predicted an appreciation of just 2.3% by year-end; and 3% in 12 months. Based on an undervalued yuan estimated at between 25%-40%, this will take more than a decade to eliminate.
Partly because most regard any yuan adjustment as a helpful but not critical part of shifting consumer demand from the US to Asia.
Previous experience in 2005-2008 was accompanied by a soaring Chinese current surplus instead.
This was also the Japanese experience after the 1985 Plaza Accord, when Japan agreed to a major yen appreciation.
Stanford Prof R. McKinnon found little long-term change in Japan’s trade surplus with the US as a result. The lesson China has taken on board is that rapid swings in the exchange rate can be most damaging.
The PBoC has yet to release details of the new regime. But has hinted that
(i) its focus is to guide the yuan against a basket of currencies, in order to foster a genuine two-way movement between the yuan and the US dollar;
(ii) the “basis did not exist for a large-scale appreciation,” i.e. big exchange rate fluctuations “are not in China’s interest” and any movement in the yuan will be gradual;
(iii) flexibility to be in both directions, i.e. instil inter-play of two-way risks; and
(iv) make more use of existing trading-band from the yuan’s central parity rate.
In practice, the regime closely resembles a managed crawl. It is akin to the policy that let the yuan appreciate by some 21% against the US dollar until the financial panic hit in 2008.
Be that as it may, the expectation of a stronger yuan can only attract inflows of “hot money” betting on further yuan appreciation.
That is why the PBoC insisted that “it is not appropriate given China’s diversification of trade and investment that the yuan is fixed solely to one currency, as it won’t accurately reflect the real value of the yuan.”
Trading under the new regime
To forestall undue expectations, the PBoC’s weekend statement made clear that a big one-time revaluation was not on the cards.
Indeed, the band under which the yuan trades daily will not be widened beyond 0.5%.
In the short run, it’s wait-and-see how far and how fast the PBoC will allow the currency to appreciate.
On its first day of trading, the yuan rose to a new high against the US dollar, closing at 6.7976, up 0.42% from Friday’s (June 18) close of 6.8262.
It was the yuan’s strongest level since the currency was regularly traded.
The previous high was in July 2008, just before it was pegged to the US dollar at around 6.84 and kept there for the next two years to help stabilise its economy amid global recession.
To be sure, the yuan had since appreciated 3.8% so far this year on a trade weighted basis, thanks to a shrinking euro.
On its second day of trading, the yuan weakened, reflecting the PBoC’s message that the new regime doesn’t guarantee a one-way bet on its currency. It ended at 6.8136, down about 0.23% from Monday’s close.
Indeed, the markets got the message – two days of trading reinforced the PBoC’s goals to allow market trading to drive the exchange rate; and to move it up and down, mainly to deter speculation.
At this early stage, the PBoC is concerned – and rightly so – that the perception of yuan appreciation as a sure thing will trigger massive capital inflows (hot money) to the detriment of Beijing’s ability to maintain stability.
The PBoC’s most effective means of control has been setting daily the rate for the yuan (i.e. CPR or central parity rate) to start-off trading.
Given the yuan can only move 0.5% + CPR, overall yuan movement is not set by intra-day trades but by how the CPR moves from one day to the next.
This way, the PBoC seldom needs to intervene directly in the market.
On the second day of trading, the CPR was set at 6.7980 (almost where it closed on Monday), i.e. 0.42% stronger than Friday’s close. This fuelled expectation the PBoC won’t try to reverse Monday’s gains.
But early into trading, the yuan reversed and abruptly weakened, with heavy US dollar buying by banks at around 6.8000.
After a week of trading, the yuan closed stronger at 6.7922, up 0.5% from its close a week earlier.
By Wednesday (June 30), it closed up 0.65% at 6.7817. To be fair, when the PBoC said there would be no dramatic movements, it wasn’t kidding. But expectations are high.
President Obama anticipates the yuan is “…going to go up significantly.”
This expectation is being tempered by the IMF: “It will take time for the yuan to reach its normal market volume.”
Next developments will depend on the patience of the US if the evolving yuan revaluation proves all too gradual.
“Hot money”
The new regime has boosted Asian currency values. The South Korean won, Australia dollar, Thai baht and the ringgit felt the biggest impact.
Traders centred on these currencies, which they regard as proxies for China’s growth and its appetite for imports with a stronger yuan.
That in turn makes central banks in Thailand, Malaysia, Indonesia and South Korea feel more comfortable about letting their currencies strengthen.
It helps fight inflation because imported goods get cheaper, and reduces need to raise interest rates.
All over Asia, there is now greater tolerance for currency appreciation.
While attracting foreign capital is usually good, short-term inflows can cause bubbles in stocks and property. And, when they pull out at the first hint of trouble, panic usually takes over.
South Korea and Indonesia imposed new measures recently aimed at moderating their impact. China’s history of sharp and disruptive capital inflows during 2005-2008 offers an object lesson.
The yuan’s gradual strengthening (up 21% against US dollar from 2005-2008) coincided with huge gains in Asian stocks (Hang Seng China Enterprises Index traded in HK rose 319%). Hence, China’s concern over speculative risks complicating efforts to control money supply.
To deal with this, the PBoC promotes the idea the yuan-US dollar exchange rate is unpredictable, and can swing in both directions. Its management of the yuan in its first 10 days demonstrated this.
This should help mitigate hot money inflows.
NDFs
China’s SAFE (State Administration of Foreign Exchange) which manages its US$2.5 trillion in foreign reserves, is concerned that hot-money investors are exploiting pricing differentials between domestic forward markets and offshore NDFs (non-deliverable forwards) market.
But unlike South Korea, which recently imposed restrictions to reduce won volatility, SAFE opted to continue to monitor instead.
NDFs are derivative contracts traded among foreign investors that pay-out based on expectations on the value of the yuan against US dollar in the future.
Following the flexibility, 12-month NDFs moved sharply on Monday to a 3% rise of the yuan in the next year (compared with 1.8% on the prior Friday); 6-month forwards are up 1.3%.
Economists offer four reasons in believing hot money flows will be limited:
(i) a 3% appreciation is too slim to attract investors unable to attract leverage;
(ii) fears the Chinese economy may “cool” and the bubble property market is about to burst;
(iii) expectations on asset prices have since “cooled-down” – Shanghai stock market is already down 30% this year and housing sales are dropping sharply; and
(iv) a possible global double-dip recession.
Internationalisation of the yuan
Concomitantly, the PBoC separately confirmed plans to expand its trial programme to settle trade deals in yuan.
It’s part of a broader effort to modernise and internationalise its currency.
First started in July 2009, it encouraged companies in Shanghai and Guangzhou province to use the yuan instead when trading with Hong Kong, Macau and some foreign countries.
After a slow start, Tuesday’s announcement expanded the programme to 20 of China’s 31 provinces and now, all foreign countries can participate.
To date, the value of such yuan-based deals totalled only US$6.5bil, or less than 1% of China’s total foreign trade.
The obstacle has been reluctance of many companies to hold the yuan because of its limited use outside China.
This has to do with China’s reluctance to make the yuan fully convertible, a policy Beijing intends to hang on to.
Increased yuan flexibility can make it more attractive to hold, provided it leads to appreciation.
This programme offers Chinese exporters a way out of worries on currency risks since their costs are mainly in yuan.
Euro’s recent volatility heightened this concern. Europe is China’s biggest trading partner.
Despite the calmness of yuan trading under the new regime, the currency dispute in China has not gone away.
But so far, reactions have been positive. At home, opposition to even a 3.5% appreciation of the yuan remains strong, especially within China’s export lobby.
The warning shot has come subtly: “Water doesn’t boil if it is heated at 99°C. But it will boil if it is heated by one more degree.”
Internationally, it’s just more wait-and-see. Expect the initial euphoria to dissipate quickly as politics and reality set in.
I am now reminded of former Chinese Prime Minister Zhou Enlai’s response when asked 175 years after the fact, what he made of the French revolution.
He thought for a moment and then answered: “It is too soon to tell.”
I end as I began. The yuan revaluation is not China’s most critical problem today.
China has to embark also on other reforms, including re-designing macroeconomic policies that don’t over-emphasise growth, privatising state-owned enterprises and liberalising financial development, striking a better balance in income distribution, and aggressively promoting services sector development.
Such a comprehensive rebalancing exercise can be made to work, but will necessarily take time. For now, it’s steady as she goes.
·Former banker Dr Lin is a Harvard-educated economist and a British Chartered Scientist who now spends time writing, teaching and promoting the public interest. Feedback is most welcome at
starbizweek@thestar.com.my
SHANGHAI (Reuters) - Now that China is staying true to its word and letting the yuan trade a bit more freely, analysts and investors outside the mainland may not be prepared for one potential outcome: a yuan drop.
China is showing a determination to let the yuan be more volatile against the dollar within its daily 0.5 percent trading band and go with the market flow, contrary to some expectations for another steady rise as happened between 2005 and 2008.
That means there are no guarantees that the yuan will appreciate against the dollar over time, and Beijing is set to stick firmly to its position on yuan flexibility no matter how much it disappoints critics -- most prominently U.S. lawmakers.
The fundamentals arguing for substantial yuan appreciation have changed since the financial crisis: China is running smaller trade surpluses, and economists see the potential for the shrinking current account surpluses to turn into deficits in coming years.
As a result, the basis for steady but slow yuan appreciation versus the dollar is not as strong as five years ago -- one reason why Beijing keeps emphasising flexibility in its pushing forward the reform of its currency system.
"China's new yuan policy lays emphasis on a quick response to changes in economic and market conditions, with no preset levels for yuan appreciation either in the short term or long term," said Chen Lu, chief economist at Haitong Securities in Shanghai.
The People's Bank of China has matched its words with deeds by allowing greater yuan volatility since the June 19 announcement and subsequent clarification that flexibility still means that yuan moves must be gradual and controllable.
The yuan has moved in an average daily range of more than 100 pips since its depegging, far above the 50 pips that dealers say would allow banks to engage in proprietary trading intraday.
This compared with a daily movement of only a few pips during the two years when the currency was pegged to the dollar.
Banks are just starting to do more day-to-day speculation, adding to liquidity in the local spot market.
Before the depegging, the limited daily swings meant all trading was almost a pure reflection of supply and demand, with the PBOC keeping the market in check.
Realised volatility in dollar/yuan has jumped as spot has started swinging more sharply within the daily trading band on the official CFETS platform.
For a graphic on dollar/yuan and realised vol, click r.reuters.com/vyv45m
WATCH THE STATE-OWNED BANKS
The PBOC is apparently fostering two-way trade within the daily trading band for the spot yuan rate , trying to get banks and companies accustomed to greater volatility and to hedging currency risks.
But during the peak of speculation on yuan gains early last week, the PBOC used state banks to buy dollars in hefty chunks, effectively limiting the market's ability to short dollar/yuan -- especially since banks are not allowed to hold short positions overnight.
"Some big Chinese banks bought dollars in such large amounts that they could not have been acting on demand from clients or doing their own trading. They apparently did that on the PBOC's behalf," said a European bank dealer.
"Instead of being complacent about the latest yuan rise, investors may need to prepare for rainy days when the PBOC actually permits the yuan to depreciate against the dollar."
Dealers said the state banks scooped up dollars at a wide variety of levels, suggesting the authorities were not trying to defend the yuan at a certain level.
These mechanisms are a step back from direct intervention by the PBOC in trading, often employed in the post-revaluation phase of yuan appreciation from 2005 to 2008 and during the de facto dollar peg of the past two years.
Dealers also believe the PBOC may have also adopted a new formula for setting the mid-point, or its reference rate, for the daily trading band.
It appears it sets the mid-point using the yuan's close on the previous day plus overnight moves in the dollar index, making the mid-point market-oriented rather than an expression of the central bank's desires as before.
But traders expect the PBOC to keep the mid-point as a ready weapon for the PBOC for limiting any yuan moves during times of market volatility. The PBOC consults with banks but keeps the market in the dark as to how it sets the rate.
During the peg, the PBOC tweaked the mid-point by only one or two pips each day. Any trades happened far from the reference rate on a given day would have to be covered around the mid-point in subsequent days, discouraging moves far from the mid-point.
Since the depegging, the yuan has risen as much as 0.83 percent as the PBOC tolerated a rise to a post-revaluation high of 6.7700 against the dollar on Friday.
While the new regime has still disappointed critics in the United States, Chinese market players believe that Beijing will not make any further concessions and that new pressure from U.S. lawmakers -- some of whom believe the yuan is undervalued by as much as 40 percent -- would likely backfire.
The euro zone debt woes have cast doubt on the pace of China's recovery, the latest reminder how vulnerable the world's third-largest economy is to a global slowdown.
China's still low per person income also argues against sharp yuan appreciation, economists say, arguing that it is inappropriate to apply Western standards to the currency of a country whose GDP per person was only 8 percent of that of the United States last year.
"What China can do is to show that it's friendly, it's cooperative and it's willing to change in line with economic and market conditions," said a senior Chinese bank dealer in Beijing. "As China will adjust the yuan's value on a floating basis, yuan appreciation forecasts will become more or less a guessing game."
(Editing by Eric Burroughs)
(For more business news on Reuters India click in.reuters.com)
Sure enough, the Peoples’ Bank of China (PBoC) announced on June 19 that it would allow greater flexibility for the yuan, thereby reverting to the flexibility it had enjoyed before the yuan was effectively re-pegged at around 6.83 per US dollar in mid-2008 to provide stability during the global crisis.
In the three years following an initial 2.1% revaluation of the yuan on July 21, 2005, the currency gained a further 19%. But in those first remaining months of 2005, the appreciation was only 8.6%.
Credibility requires serious action
China’s decision to allow flexibility back into the value of the yuan was greeted with “grudging optimism”.
Few think, and rightly so, the move will have a dramatic impact on rebalancing the global economy. Partly because of its limited size.
The yuan offshore forward market on the first trading day predicted an appreciation of just 2.3% by year-end; and 3% in 12 months. Based on an undervalued yuan estimated at between 25%-40%, this will take more than a decade to eliminate.
Partly because most regard any yuan adjustment as a helpful but not critical part of shifting consumer demand from the US to Asia.
Previous experience in 2005-2008 was accompanied by a soaring Chinese current surplus instead.
This was also the Japanese experience after the 1985 Plaza Accord, when Japan agreed to a major yen appreciation.
Stanford Prof R. McKinnon found little long-term change in Japan’s trade surplus with the US as a result. The lesson China has taken on board is that rapid swings in the exchange rate can be most damaging.
The PBoC has yet to release details of the new regime. But has hinted that
(i) its focus is to guide the yuan against a basket of currencies, in order to foster a genuine two-way movement between the yuan and the US dollar;
(ii) the “basis did not exist for a large-scale appreciation,” i.e. big exchange rate fluctuations “are not in China’s interest” and any movement in the yuan will be gradual;
(iii) flexibility to be in both directions, i.e. instil inter-play of two-way risks; and
(iv) make more use of existing trading-band from the yuan’s central parity rate.
In practice, the regime closely resembles a managed crawl. It is akin to the policy that let the yuan appreciate by some 21% against the US dollar until the financial panic hit in 2008.
Be that as it may, the expectation of a stronger yuan can only attract inflows of “hot money” betting on further yuan appreciation.
That is why the PBoC insisted that “it is not appropriate given China’s diversification of trade and investment that the yuan is fixed solely to one currency, as it won’t accurately reflect the real value of the yuan.”
Trading under the new regime
To forestall undue expectations, the PBoC’s weekend statement made clear that a big one-time revaluation was not on the cards.
Indeed, the band under which the yuan trades daily will not be widened beyond 0.5%.
In the short run, it’s wait-and-see how far and how fast the PBoC will allow the currency to appreciate.
On its first day of trading, the yuan rose to a new high against the US dollar, closing at 6.7976, up 0.42% from Friday’s (June 18) close of 6.8262.
It was the yuan’s strongest level since the currency was regularly traded.
The previous high was in July 2008, just before it was pegged to the US dollar at around 6.84 and kept there for the next two years to help stabilise its economy amid global recession.
To be sure, the yuan had since appreciated 3.8% so far this year on a trade weighted basis, thanks to a shrinking euro.
On its second day of trading, the yuan weakened, reflecting the PBoC’s message that the new regime doesn’t guarantee a one-way bet on its currency. It ended at 6.8136, down about 0.23% from Monday’s close.
Indeed, the markets got the message – two days of trading reinforced the PBoC’s goals to allow market trading to drive the exchange rate; and to move it up and down, mainly to deter speculation.
At this early stage, the PBoC is concerned – and rightly so – that the perception of yuan appreciation as a sure thing will trigger massive capital inflows (hot money) to the detriment of Beijing’s ability to maintain stability.
The PBoC’s most effective means of control has been setting daily the rate for the yuan (i.e. CPR or central parity rate) to start-off trading.
Given the yuan can only move 0.5% + CPR, overall yuan movement is not set by intra-day trades but by how the CPR moves from one day to the next.
This way, the PBoC seldom needs to intervene directly in the market.
On the second day of trading, the CPR was set at 6.7980 (almost where it closed on Monday), i.e. 0.42% stronger than Friday’s close. This fuelled expectation the PBoC won’t try to reverse Monday’s gains.
But early into trading, the yuan reversed and abruptly weakened, with heavy US dollar buying by banks at around 6.8000.
After a week of trading, the yuan closed stronger at 6.7922, up 0.5% from its close a week earlier.
By Wednesday (June 30), it closed up 0.65% at 6.7817. To be fair, when the PBoC said there would be no dramatic movements, it wasn’t kidding. But expectations are high.
President Obama anticipates the yuan is “…going to go up significantly.”
This expectation is being tempered by the IMF: “It will take time for the yuan to reach its normal market volume.”
Next developments will depend on the patience of the US if the evolving yuan revaluation proves all too gradual.
“Hot money”
The new regime has boosted Asian currency values. The South Korean won, Australia dollar, Thai baht and the ringgit felt the biggest impact.
Traders centred on these currencies, which they regard as proxies for China’s growth and its appetite for imports with a stronger yuan.
That in turn makes central banks in Thailand, Malaysia, Indonesia and South Korea feel more comfortable about letting their currencies strengthen.
It helps fight inflation because imported goods get cheaper, and reduces need to raise interest rates.
All over Asia, there is now greater tolerance for currency appreciation.
While attracting foreign capital is usually good, short-term inflows can cause bubbles in stocks and property. And, when they pull out at the first hint of trouble, panic usually takes over.
South Korea and Indonesia imposed new measures recently aimed at moderating their impact. China’s history of sharp and disruptive capital inflows during 2005-2008 offers an object lesson.
The yuan’s gradual strengthening (up 21% against US dollar from 2005-2008) coincided with huge gains in Asian stocks (Hang Seng China Enterprises Index traded in HK rose 319%). Hence, China’s concern over speculative risks complicating efforts to control money supply.
To deal with this, the PBoC promotes the idea the yuan-US dollar exchange rate is unpredictable, and can swing in both directions. Its management of the yuan in its first 10 days demonstrated this.
This should help mitigate hot money inflows.
NDFs
China’s SAFE (State Administration of Foreign Exchange) which manages its US$2.5 trillion in foreign reserves, is concerned that hot-money investors are exploiting pricing differentials between domestic forward markets and offshore NDFs (non-deliverable forwards) market.
But unlike South Korea, which recently imposed restrictions to reduce won volatility, SAFE opted to continue to monitor instead.
NDFs are derivative contracts traded among foreign investors that pay-out based on expectations on the value of the yuan against US dollar in the future.
Following the flexibility, 12-month NDFs moved sharply on Monday to a 3% rise of the yuan in the next year (compared with 1.8% on the prior Friday); 6-month forwards are up 1.3%.
Economists offer four reasons in believing hot money flows will be limited:
(i) a 3% appreciation is too slim to attract investors unable to attract leverage;
(ii) fears the Chinese economy may “cool” and the bubble property market is about to burst;
(iii) expectations on asset prices have since “cooled-down” – Shanghai stock market is already down 30% this year and housing sales are dropping sharply; and
(iv) a possible global double-dip recession.
Internationalisation of the yuan
Concomitantly, the PBoC separately confirmed plans to expand its trial programme to settle trade deals in yuan.
It’s part of a broader effort to modernise and internationalise its currency.
First started in July 2009, it encouraged companies in Shanghai and Guangzhou province to use the yuan instead when trading with Hong Kong, Macau and some foreign countries.
After a slow start, Tuesday’s announcement expanded the programme to 20 of China’s 31 provinces and now, all foreign countries can participate.
To date, the value of such yuan-based deals totalled only US$6.5bil, or less than 1% of China’s total foreign trade.
The obstacle has been reluctance of many companies to hold the yuan because of its limited use outside China.
This has to do with China’s reluctance to make the yuan fully convertible, a policy Beijing intends to hang on to.
Increased yuan flexibility can make it more attractive to hold, provided it leads to appreciation.
This programme offers Chinese exporters a way out of worries on currency risks since their costs are mainly in yuan.
Euro’s recent volatility heightened this concern. Europe is China’s biggest trading partner.
Despite the calmness of yuan trading under the new regime, the currency dispute in China has not gone away.
But so far, reactions have been positive. At home, opposition to even a 3.5% appreciation of the yuan remains strong, especially within China’s export lobby.
The warning shot has come subtly: “Water doesn’t boil if it is heated at 99°C. But it will boil if it is heated by one more degree.”
Internationally, it’s just more wait-and-see. Expect the initial euphoria to dissipate quickly as politics and reality set in.
I am now reminded of former Chinese Prime Minister Zhou Enlai’s response when asked 175 years after the fact, what he made of the French revolution.
He thought for a moment and then answered: “It is too soon to tell.”
I end as I began. The yuan revaluation is not China’s most critical problem today.
China has to embark also on other reforms, including re-designing macroeconomic policies that don’t over-emphasise growth, privatising state-owned enterprises and liberalising financial development, striking a better balance in income distribution, and aggressively promoting services sector development.
Such a comprehensive rebalancing exercise can be made to work, but will necessarily take time. For now, it’s steady as she goes.
·Former banker Dr Lin is a Harvard-educated economist and a British Chartered Scientist who now spends time writing, teaching and promoting the public interest. Feedback is most welcome at
starbizweek@thestar.com.my
Watch out: yuan may fall as volatility picks up
By Lu Jianxin and Koh Gui QingSHANGHAI (Reuters) - Now that China is staying true to its word and letting the yuan trade a bit more freely, analysts and investors outside the mainland may not be prepared for one potential outcome: a yuan drop.
China is showing a determination to let the yuan be more volatile against the dollar within its daily 0.5 percent trading band and go with the market flow, contrary to some expectations for another steady rise as happened between 2005 and 2008.
That means there are no guarantees that the yuan will appreciate against the dollar over time, and Beijing is set to stick firmly to its position on yuan flexibility no matter how much it disappoints critics -- most prominently U.S. lawmakers.
The fundamentals arguing for substantial yuan appreciation have changed since the financial crisis: China is running smaller trade surpluses, and economists see the potential for the shrinking current account surpluses to turn into deficits in coming years.
As a result, the basis for steady but slow yuan appreciation versus the dollar is not as strong as five years ago -- one reason why Beijing keeps emphasising flexibility in its pushing forward the reform of its currency system.
"China's new yuan policy lays emphasis on a quick response to changes in economic and market conditions, with no preset levels for yuan appreciation either in the short term or long term," said Chen Lu, chief economist at Haitong Securities in Shanghai.
The People's Bank of China has matched its words with deeds by allowing greater yuan volatility since the June 19 announcement and subsequent clarification that flexibility still means that yuan moves must be gradual and controllable.
The yuan has moved in an average daily range of more than 100 pips since its depegging, far above the 50 pips that dealers say would allow banks to engage in proprietary trading intraday.
This compared with a daily movement of only a few pips during the two years when the currency was pegged to the dollar.
Banks are just starting to do more day-to-day speculation, adding to liquidity in the local spot market.
Before the depegging, the limited daily swings meant all trading was almost a pure reflection of supply and demand, with the PBOC keeping the market in check.
Realised volatility in dollar/yuan has jumped as spot has started swinging more sharply within the daily trading band on the official CFETS platform.
For a graphic on dollar/yuan and realised vol, click r.reuters.com/vyv45m
WATCH THE STATE-OWNED BANKS
The PBOC is apparently fostering two-way trade within the daily trading band for the spot yuan rate , trying to get banks and companies accustomed to greater volatility and to hedging currency risks.
But during the peak of speculation on yuan gains early last week, the PBOC used state banks to buy dollars in hefty chunks, effectively limiting the market's ability to short dollar/yuan -- especially since banks are not allowed to hold short positions overnight.
"Some big Chinese banks bought dollars in such large amounts that they could not have been acting on demand from clients or doing their own trading. They apparently did that on the PBOC's behalf," said a European bank dealer.
"Instead of being complacent about the latest yuan rise, investors may need to prepare for rainy days when the PBOC actually permits the yuan to depreciate against the dollar."
Dealers said the state banks scooped up dollars at a wide variety of levels, suggesting the authorities were not trying to defend the yuan at a certain level.
These mechanisms are a step back from direct intervention by the PBOC in trading, often employed in the post-revaluation phase of yuan appreciation from 2005 to 2008 and during the de facto dollar peg of the past two years.
Dealers also believe the PBOC may have also adopted a new formula for setting the mid-point, or its reference rate, for the daily trading band.
It appears it sets the mid-point using the yuan's close on the previous day plus overnight moves in the dollar index, making the mid-point market-oriented rather than an expression of the central bank's desires as before.
But traders expect the PBOC to keep the mid-point as a ready weapon for the PBOC for limiting any yuan moves during times of market volatility. The PBOC consults with banks but keeps the market in the dark as to how it sets the rate.
During the peg, the PBOC tweaked the mid-point by only one or two pips each day. Any trades happened far from the reference rate on a given day would have to be covered around the mid-point in subsequent days, discouraging moves far from the mid-point.
Since the depegging, the yuan has risen as much as 0.83 percent as the PBOC tolerated a rise to a post-revaluation high of 6.7700 against the dollar on Friday.
While the new regime has still disappointed critics in the United States, Chinese market players believe that Beijing will not make any further concessions and that new pressure from U.S. lawmakers -- some of whom believe the yuan is undervalued by as much as 40 percent -- would likely backfire.
The euro zone debt woes have cast doubt on the pace of China's recovery, the latest reminder how vulnerable the world's third-largest economy is to a global slowdown.
China's still low per person income also argues against sharp yuan appreciation, economists say, arguing that it is inappropriate to apply Western standards to the currency of a country whose GDP per person was only 8 percent of that of the United States last year.
"What China can do is to show that it's friendly, it's cooperative and it's willing to change in line with economic and market conditions," said a senior Chinese bank dealer in Beijing. "As China will adjust the yuan's value on a floating basis, yuan appreciation forecasts will become more or less a guessing game."
(Editing by Eric Burroughs)
(For more business news on Reuters India click in.reuters.com)
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