Too Big Then Fail

When comes to money, anything that grow too huge, it will be gone. It will always be replaced by something smaller or something invisible.

Enron – a corporation employed 20,000 staffs and it was the world’s leading electricity, natural gas, communications and paper companies, with revenues of $101 billion in 2000.  When the mega corporation grown to this huge, disaster is awaiting. Enron declared bankruptcy on December 2, 2001. It was the largest bankruptcy in US history back then. Interestingly, Enron was not the only example of huge corporation failure. Later in year 2002, Worldcom (another even bigger corporation) filed an even bigger bankruptcy, surpassed Enron record. Then in year 2008, Lehman Brothers filed the largest ever bankruptcy in US history. Enron, Worldcom, Lehman Brothers are the typical examples of when something grown too huge, it will be gone. These huge corporation has been replaced by something smaller.

Maybank is Malaysia’s largest financial services group in Malaysia. Maybank has more branches than any other banks – in all over Malaysia. When the bank has grown this huge, it is taking a shift to go invisible, which is a very smart move. The invisible approach is known as online banking. Customers no longer have to queue at the counter to perform transaction. Right now, a Maybank online banking customer can pay bills, reload hand phone credit, transfer money, buy shares, place a fixed deposit, and a lot more just by going online. Money transactions can be done online and many prefer to do it online because it is safer, save time and more efficient. The whole monetary transaction process has gone invisible. Now, we no longer can see the money with our eyes, we need to see the money with our mind. Simple because, the money has gone invisible.

For anything huge to stay, it will have to go either invisible or replaced by something smaller.

Many things started off small, it grown into a success. When success grown too big, human are blinded by arrogance. In the examples of Enron, Worldcom and Lehman Brothers, many people blindly believed that the corporations are so huge and they should not fail. Unfortunately, the reality is they failed.

Shipping industry started small and it grown into a huge industry. When everyone was extremely confident that Titanic was an “unsinkable” ship, it sank. Titanic was weighted 46,328 tons, 268 meters long and 55 meters high, approximately the same size as London’s Tower Bridge. It has simply grown too huge. This is another example of something has grown too huge, everyone believed it would not fail, and then it failed. Titanic took 1,514 lives.

Another local example is Genneva Gold. It started off small, grown into a huge company with 60,000 customers and monthly turnover of RM2 billion. It was raided by Bank Negara Malaysia on 1st October 2012.

According to Awang Adek Hussin (Malaysia Deputy Finance Minister), Genneva Malaysia’s liabilities exceeded its assets. The reason Genneva attracted the attention of local authority in the first place simply because it has grown too huge and did not go invisible. Now, it is potentially replaced by smaller precious metal dealers in the market.

So, what’s the big deal of showing all the huge failure?

Those are the failure of the past. What we want to concern is, what is going to happen next? And how we make the most benefits from it? In order to answer that, we need to look for what is extremely huge now. The answer is: the US Economy.

Image from page 10, Practical Guide For Investing Silver In Malaysia

Obama was re-elected as the president for the next 4 years. Obama is a big government guy. He is supporter of Keynesian economics. In simpler terms, he is good in spending money and creating more money. Ever since he took over the US government in 2008, US debt level has been increasing ever since and it was increasing in the fastest rate in US history.

Last year Obama cut $38 billion dollars out of $3.5 trillion dollars in spending. This is equivalent to me cutting RM380 who happens to be spending RM35,000 while only earning RM22,000. Get the idea?

US Economy has grown too huge and it is waiting for the financial disaster. I’m personally preparing myself to take advantage of this by investing in silver. When US Economy comes down, both gold and silver are going to shine. For a number of good reasons, silver is going to beat gold in the coming years. You can find out more about the reasons here.

Lastly, I will leave you with this, when Obama took over US in 2008, silver price was less than $15. Silver price now is $32. So, how much silver price be when Obama leaves office in year 2017?

You can find out more about my work, the eBook: Practical Guide For Investing Silver In Malaysia will explain the current economy and how it affects you as Malaysian. It will show you how to take advantage of the economy mess through silver investment.

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