What a year 2008 has been!
Exactly a year ago, whoever would have thought 2008 could bring with it so much financial turmoil?
Whoever would have thought we would all be ending the year with a quiet pessimistic whimper as the worst financial crisis since the Great Depression in the 1930s continues to pull down the world economies?
Read more for My Smart Money Tip’s 2008 financial wrap-up.
2008 started off relatively well with hints of trouble starting to show towards mid-2008. In Malaysia, inflation started to soar to a 26 year high as oil prices peaked to US$147 a barrel in July and petrol prices shot to RM2.70 a litre. Even the Ringgit was not spared against major currencies and the KLSE took a tumble which made it a ripe time for bargain-hunting investors.
The announcement of the Malaysian 2009 Budget in August brought little cheer to nervous urbans Malaysians who started to notice the first signs of trouble brewing in the US as the sub-prime bubble threatened to burst.
And burst it did in October when the entire US financial system collapsed. The US Government’s massive US$700 billion bailout was originally rejected, causing the US Dow Jones to plunge and investors lost over US$1.2 trillion. The bailout finally went through in time to save the nation’s mortgage giants, Fannie Mae and Freddie Mac; but it was sadly too late for Lehman Brothers, one of the world’s oldest banks, that went absolutely bankrupt in a move that sent shockwaves throughout the world’s financial systems and stock markets as each market came tumbling down like nine pins. The US debt has surpassed US$10.2 trillion and the numbers just keep growing as US and the world battle this crisis which is not only bringing banks to its knees but even 100 year-old retailers such as Woolworths which has been forced to shut down forever after its debts soared.
On the local front, Malaysians seem a little luckier as the full impact of the recession has still not hit with major job cuts. Nevertheless, Malaysians have started cutting back on expenditure while others contemplate reducing their EPF contributions from 11% to 8% under a Government stimulus package for the economy. As the retail sector starts to slow, retailers and restaurants are offering huge discoungs from 65% and 75% food discounts, hypermarket price reductions, freebies andtravel promotions.
So what lies ahead for 2009?
Many are anticipating a tough year ahead and have even scaled back on Christmas celebrations and eating out. In these coming pessimistic and uncertain times, look out here for more smart money tips, clever ways to save and to spend wisely. Ultimately, it isn’t about how much you earn but how much you can save in the coming rainy days.
Do have a Happy New Year and count your little blessings as there are still many to be had