Economic recession is said on be on its way. If you still have no idea how this all happens, head over to read the explanation by Patrick at Cash Money Life. The main cause of the 2008 financial crisis in the United States is the excessive use of credit, especially in the housing market. The real estate bubble finally burst.
However, the local financial institution is not much affected. Local Malaysians still need to fork out at least 10% for the deposit, and has a good credit history before you get the nod from bankers for your mortgage loan.
To have a better understanding, I recommend that you read this explanation by Hanson. It is well-written, in Malaysian layman terms.
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Thanks for sharing
I think Malaysian equity market will bounce back most likely. Time to dive in slowly to plant some investment seeds!
According to this Hanson, we have high savings rate in Malaysia. What savings is he referring to? That may still be true among the older generation, but our young people today live off credit cards to enjoy the “Starbucks lifestyle.” Middle-class wage earners who spend responsibly also cannot save because of the twin curses of hyper-inflation and 3rd world wages in Malaysia.
It is also premature for the govt to gloat that Malaysia will not be heavily affected by this crisis. We are an export and commodity-driven economy. We ARE heavily dependent on demand for both our exports and our commodities. The US economy makes up 25% of the whole world's economy. If US falls into a deep and sustained recession, the only unaffected people are those who live in some small island who fish and collect coconuts for a living.
High saving rate is seen amongst the elder.Younger generation are having
much trouble to save.