Small investors asked: “Why the entire world’s central bank injected funds did not brought good response from shares market?” It is seem like become worst and further pushed the shares index registered lower than before injected funds and seem like cannot stop decline.
In my on view, funds injected in the wrong time and wrong place. My opinions are: -
A) Wrong Time
Central bank inject funds should emphasis said that there is a reserve funds and does not allow every financial institution to use it now. If the funds inject now, it brings bank will select certain people to run away from the ground. As we aware financial institution eyeing on big and rich people. The funds inject in the beginning stage allow the big and rich investors run quickly. It brought bad situation and helping certain group of people run faster to safeguard their funds.
b) Wrong Place
Central bank should helping more to certain corporate to maintain the loan does not immediately recall by financial institution instead of given the funds direct to financial institution. As I said, financial institution may select certain people to help instead of helping the necessary people or may be a group of hedge funds to safeguard the turnover and profit.
Central bank gives the wrong direction to all population in the country. The true is sub prime mortgage loan is a poison but well packaging by financial institution. They sell it and resell it several times in the market. They aware it and allow it. If one product turned into so many times by few days or few years and never use it at proper time. It means the product expiry date has been overdue. Like a diseases spread over the world.
Central bank should not encourage the disease growth up and should take immediate action to cut it off. My point of view is, central bank should: -
1) Informed the financial institution and public, commercial loan maintain as normal by support of set up a special funds to plan take over from financial institution.
2) Informed the financial institution, 6 months period cannot reduce any commercial loan. If any firm does not follow the instruction or guide, it should be charged penalty or suspended licence.
3) The fund injection cannot use to finance any trust funds.
4) Compulsories all bank announce the figure which involving the sub prime mortgage loan within one-week working days. Provide a necessary figure to written off the sub prime loan.
5) Announced that which company earning maintain/higher at previous year given a special tax allowances.
6) Control financial institution given the bonus to selling the sub prime product by higher taxation imposed.
7) Penalty the rating company who provide the wrong rating information.
8) All sub prime loan or grade b- loan can be sell one time off. No third hand/transaction involved.
The above new and special rule will immediate effective now and will expired after 9 months. My little opinion it can help: -
a) Normal/basic commercial activities maintain.
b) No speculation or misuse the special funds.
c) Encourage company concentrate the business activities.
d) Stable the liquidity of normal fund requirement.
e) Push back the responsibilities of sub prime loan to issuer.
Write by Kacaubusy on 17 Aug 2007
