Our Money Is Melting!!!

I went out this afternoon. I think I need a few hours out of the house. Yeah. Ha3 And I saw loads of people going in and out of the mall. And yesterday at KLCC, locals and foreigners alike are pouring Suria like floods at Kelantan during tengkujuh. When I saw these people, I began thinking. 

'The whole world is at a financial crisis, and still here we are.'

Well, it shows that Malaysia is not badly affected by the turmoil, really. If we are, we wouldn't be like that. I remember the great financial crisis of 1997. That is a good example of a meltdown. This time probably we are prepared. Most probably. 

In the US, all the banks usually will give loans based on the floating rate. This means that the interest rate will fluctuate up and down, according to the surrounding economy. As we know, the worlds' economy lately is not that good. Therefore, as the IMF and The Fed always agreed, the banks will increase the interest rate. Their objective is so that people will stop taking loans, and stop spending until the economy heals. Seems like a plan huh?

Well what about the current creditors? They're still paying for their loans. And when the interest rate increases, they pay a large sum of money only to cover for their interests. The principal is reduced by a miniscule amount. With that, creditors can't afford to pay their loans. This occurs around the whole of US and bad debt of billions of American Dollars were recorded. This is the reason that the world economy collapse. This is the start of the global financial turmoil. 

In 1997, Mahathir Mohamad thinks otherwise. He proposed that banks should lower the interest rate so that many would make loans. With that loans, they will generate the countrys' economy and it will keep on going. This act was condemned by the US as the undesirable. Look at what it brought us. We are one of the first in the world to arise from the great crisis of 1997. Now, the US is following the same as what Mahathir did.