If history is off any guidance

If history is of any guidance, the first thing comes to mind is that history can be so invaluable to learn from in order not to repeat them.

Yet it is amazing how history repeated them over and over again.

As many of us look forward or even try to predict/forecast the future, we seems to ignore what history has told us over and over again.

When many experts say that "this time is different", the presence looks awefully similar to what has happened in the past.

It is true that history never repeats itself exactly. Many of the causes of modern day society problem appears to be the same triggers that led to regretable and irreversable consequences in the past.

Here is a wonderful place to reconnect and remind ourselves with how far human races has come along.

http://www.youtube.com/watch?v=6YJfOZkriyk&feature=player_embedded

Invest wisely

Call to rein in Big four banks

This is the title of an article in the financial press of Australia.

A study found that for every $100 spent in Australia, $3 ended up as bank profit.

Not bad for banks but not so great for Australian consumers.

For those who don't know the banking section in Australia. The following is a brief overview.

There are only 4 Australia banks which dominates over 80% of the banking business, so called big four. There is a "four pillar" policy in Australia which prevents banks from taking over each other and being taken over.

This regulatory barrier served Australia banks really well and create a fairly low level of competition, which subsequently breed "super profit" for the banks.

One simple example is that US banks has long been paying its customer to win and keep its retail savings business while Australian banks charges customer a monthly fee typical of $5.

Only recently the banks started to adopt a fee-free business model.

The sentiment toward banks has always been negative.

The article suggests a number of policy to rein "super profit" from the big four.

Some of the suggestions are:

- limit mortgage rate increase to changes in Reserve Bank cash rate
- laws to ensure that credit is not pressed on people with low income

These proposed policies appears to be fairly heavy handed.

The harsh regulation may simply add cost to banks and push banks to seek other means to fill in the void. Consequently the regulator may come with other policy to stop banks once again.

This negative cycle of playing "catch me if you can" does not serve in the best interest in either consumers, banks nor the regulator.

I would suggest government to consider policy to promote competition rather than prescriptive regulations. Let the invisible hand to take its own course, which will be more acceptable and effective in bringing benefits to consumers.

One way to increase competition is to open up the banking sector in an orderly fashion. Try to dialgue with both domestic and foreign banks to better achieve its policy intention.

Cooperation is the key here. Together we can build a strong, competitive and more resilient banking sector in Australia.

Japanese Yen

There has been talk about the strength of Yen against major currencies.

Yen USD cross rate has reached multi-year high in recent times.

The Friday disappointing US payroll number didn't help and USD plunged sharply against Yen in early trade.

One thing investor can take cue of is the strength of Yen is more owing to weakness of US economy rather than underlying strength in Japanese economy.

With record high public debt, it is very difficult to imagine a strong Yen relating to a booming economy.

Many savvy experts recommend this a good time to short yen as a long term play due to the weak economic fundamental.

My inner trade has told me that further upside of Yen to USD is limited. A gradual short postion on Yen does not appear a bad strategy.

However, bear in mind that this trade may take some time before it pays off as USD isn't the most desirable currency of the globe right now.

Trade wisely