2010 FIFA World Cup Kicks Off Summer Scams

Some call it soccer. Some call it football. No matter what you term the game, the effects of the 2010 FIFA World Cup, the most widely-viewed sporting event across the globe, can be seen all around the world — and around the Web — following the kickoff in June.

A growing trend seen by online security experts is for scammers to take advantage of the latest breaking news and major worldwide events to distribute malware and, unfortunately, the World Cup, which will be in full swing until mid July, is a prime opportunity for cyber criminals to do just that.

Since the games began this summer, the cyber scams have been kicking off in full force, with reports of sophisticated World Cup-related malware scams, increases in spam themed around to games, and other malicious online ploys.

“Cyber criminals know that they can exploit popular international events to lure victims through various types of social engineering tactics. The World Cup is a prime target due to its prestige and the amount of interest it draws from fans around the world,” says Andrew Browne, head of Lavasoft Malware Labs.

How can you avoid becoming a victim of an attack? Lavasoft Malware Labs' analysts have compiled a list of five eminent online security risks surrounding the World Cup — and specific steps you can take to stay safe. Read on to learn more.

1. Spam with malicious attachments. Be wary of unsolicited World Cup-related messages with an attachment, particularly if the attached file is a PDF. One of the latest PDF attacks took advantage of an Adobe Reader vulnerability that was recently patched. “Check that all applications and programs are patched and up-to-date. Turn on Windows automatic updates and make sure to have the latest security patches from Microsoft installed,” Malware Labs says.
2. Targeted phishing ploys. There has been a deluge of the following themes in World Cup-related phishing messages: refunds, tickets sales and lotteries, accommodations, travel, and team merchandise. “If you receive an unsolicited message, delete it without opening,” Malware Labs says.
3.  SEO poisoning. Cyber scammers are poisoning search engine results using World Cup-related headlines and videos to lead to malicious sites in an attempt to push rogue (fake) security software and other types of malware. “Check all URL's carefully before clicking on them, and be especially mindful of only using trusted sites during this time,” Malware Labs says.
4.  Application downloads. With so many viewers planning to watch the games online, malware purveyors can be expected to capitalize on ways to infect users looking to download media players. “Vet any applications that allow you to stream World Cup content,” Malware Labs says.
5.  Legitimate sites serving malware. Malicious code can be hacked into vulnerable, legitimate websites in order to infect users. Legitimate World Cup-related sites are attractive targets for cybercriminals. “Make sure that you have core protection on your PC (anti-virus, anti-spyware, and firewall). Consider using an alternate browser, like Google Chrome or Mozilla Firefox, rather than Internet Explorer. If you use Firefox, install the NoScript plug-in for Firefox to intercept potentially malicious scripts (http://noscript.net),” Malware Labs says.

“The target of these types of social engineering attacks is the computer user, where infection occurs by the person making an interactive choice. We hope that sports fan watching the games online from their home or office — in addition to having anti-malware protection on their PC's — pay close attention to the types of threats that we anticipate will be prevalent so they have a better understanding of what not to click, download, or respond to,” Browne says.

Inflation or Deflation?

Martin Feldstein

 CAMBRIDGE – The investors that I talk to these days are not sure whether to worry more about future inflation in the United States or about future deflation. The good news is that the answer – for at least the next few years – is that investors should worry about “neither.”

America’s high rate of unemployment and the low rates of capacity utilization imply that there is little upward pressure on wages and prices in the US. And the recent rise in the value of the dollar relative to the euro and the British pound helps by reducing import costs.

Those who emphasize the risk of inflation often point to America’s enormous budget deficit. The Congressional Budget Office projects that the country’s fiscal deficit will average 5% of GDP for the rest of the decade, driving government debt to 90% of GDP, from less than 60% of GDP in 2009. While those large fiscal deficits will be a major problem for the US economy if nothing is done to bring them down, they need not be inflationary.

Sustained budget deficits crowd out private investment, push up long-term real interest rates, and increase the burden on future taxpayers. But they do not cause inflation unless they lead to excess demand for goods and labor. The last time the US faced large budget deficits, in the early 1980’s, inflation declined sharply because of a tight monetary policy. Europe and Japan now have both large fiscal deficits and low inflation.

The inflation pessimists worry that the government will actually choose a policy of faster price growth to reduce the real value of the government debt. But such a strategy can work only in countries where the duration of the government’s debt is long and the interest rate on that debt is fixed. That is because an increase in the inflation rate causes interest rates on new debt to rise by an equal amount. The resulting higher interest payments add to the national debt, offsetting the erosion of the real value of the existing debt caused by the higher inflation.

In the current situation, the US cannot reduce the real value of its government debt significantly by indulging in a bout of inflation, because the average maturity on existing debt is very short – only about four years. And the projected fiscal deficits imply that the additional debt that will be issued during the next decade will be as large as the total stock of debt today. So raising inflation is no cure for the government’s current debt or future deficits.

Those who worry about deflation note that the US consumer price index has not increased at all in the past three months. Why won’t that continue and feed on itself – as it has in Japan – as consumers delay spending in anticipation of even lower prices in the future? And doesn’t Japan’s persistent deflation since the early 1990’s also show that, once it begins, deflation cannot be reversed by a policy of easy money or fiscal deficits?

But the recent weakness in US prices is very different from the situation that prevails in Japan. Zero inflation for the past three months has been a one-time event driven by the fall in energy prices. The other broad components of the consumer price index have increased in recent months, and the consumer price index is up about two percentage points over the past 12 months.

Moreover, surveys of consumer expectations show that US households expect prices to rise at more than 2% in both the coming year and the more distant future. That expected inflation rate is consistent with the difference in interest rates between ordinary US government bonds and Treasury Inflation Protected Securities. With such expectations, consumers have no reason to put off purchases.

A second reason for relatively low inflation in recent years has been a temporary fall in the cost of production. As firms shed workers during the economic downturn, output fell more slowly. The resulting rise in output per worker, together with slow wage growth, reduced unit labor costs. That process is now coming to an end as employment rises.

So the good news is that the possibility of significant inflation or deflation during the next few years is low on the list of economic risks faced by the US economy and by financial investors.

But, while inflation is very likely to remain low for the next few years, I am puzzled that bond prices show that investors apparently expect inflation to remain low for ten years and beyond, and that they also do not require higher interest rates as compensation for the risk that the fiscal deficit will cause real interest rates to rise in the future.

Copyright: Project Syndicate, 2010.
www.project-syndicate.org
For a podcast of this commentary in English, please use this link:
http://media.blubrry.com/ps/media.libsyn.com/media/ps/feldstein24.mp3

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Resetting economy, society and the world

Review by Abby Wong

 The Great Reset: How New Ways of Living and Working Drive Post-Crash Prosperity

Author: Richard Florida
Publisher: Harper Collins

AN economic downturn is always unwelcome. But amidst even the worst depression, there is always a silver lining. This hope is firmly held by Richard Florida, a renowned American economist and urban theorist who has authored three international bestsellers on social trends of the 21st century, The Rise of the Creative Class, The Flight of the Creative Class and Who’s Your City?

In his latest book, The Great Reset, Florida sets his foot into economics, calling the current financial woes the necessary adjustments that will eventually give rise to new epochs of inventiveness, ingenuity, economic growth, and prosperity. But Florida is not being imprudent. Lest he upsets millions of people affected by the current downturn, he backs this idea with facts drawn from both history and rigorous research.

With flair of a storyteller, Florida recounts causes of the Long Depression of 1870s and the Great Depression of 1930s, and analyses the ensuing social and economical effects – the rise of innovation, changes in infrastructure, geographical resettlement and alteration of ways of living and working. Florida calls these adjustments resets and thinks the next Great Reset will take place soon or even now, if not already.

But what has worked in the past will not work quite as well in this era. No longer is our economy driven by manufacturing and factories like it was in the 20th century. Connected by a web of countries across the world and confronted by a mélange of problems never before seen as imminent, today’s economy can only be propelled by ideas and creativity.

Furthermore, with the busting of consumerism, restarting economic growth this time requires more than boosting spending but a new socio-economic framework that is in line with frugality, flexibility, conservation and environmentalism.

With his trademark blend of wit, verve and analysis, Florida presents an optimistic future and a society that he envisions as vibrant, mobile, prosperous and creative. To achieve this vision, he calls for abolishment of certain long-held beliefs, realignment of our way of life and redesign of governments’ policies.

So, will the current crash usher in a new age of thrift, caution and frugality? Will car-ditching be the next badge of honour, replacing car-loving? Will troubled, if not deserted, industrialised cities be revitalised? With mortgage lending became overblown and began to undermine the economy, will house ownership be replaced by renting? Finally, will education, infrastructure, employment, and the role of government be improved, adjusted and attuned?

Yes to all that, according to Florida, as he puts forth his reasons and suggestions. For instance, to breathe life back into abandoned industrial cities, he suggests a high-speed rail system that is faster than a speeding bullet, knitting active and dormant cities together to form mega-regions.

On jobs, which are fast disappearing as a result of the crash, Florida advocates creative job creation by knowledge professionals, rather than depending on big conglomerates that hire and fire and then close down when crisis takes place. On housing and cars, bigger is no longer better, while renting will be the new normal, more for mobility reason than for cautious introspection.

Though some changes may have already taken place, the real challenge, according to Florida, lies in the efficient and productive use of capital, which has become dangerously scarce after the financial crisis. Only by making intelligent investments in new infrastructure that goes beyond the current energy and environmental constraints, can we build a new creative economy and society that is vibrant and prosperous.

The Great Reset is a fantastic book that I think should be read especially by all policy makers seeking an inkling as to what will and should happen in the aftermath of this disastrous financial meltdown. Although much of the context is drawn from the United States, it is very much written for the emerging economic and social landscapes of the world.

Indeed, I closed this immensely stimulating book with a sigh and reflected on what seems to be a poverty of natural resources we are facing and wondered for how long the earth can endure human destruction before arriving at the much better world that Florida envisions.

Not too long, I hope.

G20 walks tightrope between growth, deficits

(Agencies)
Updated: 2010-06-28 08:04, China Daily

TORONTO – World leaders agreed on Sunday to take separate paths toward shared goals of lasting growth and safer banks as two years of global crisis give way to a fragile economic recovery.

The leaders of the Group of 20 pose for a family photo at the G20 Summit in Toronto June 27, 2010. [Agencies]

Balance was the buzz word. The Group of 20 pledged to halve budget deficits by 2013 without stunting growth, and clamp down on risky bank behavior without choking off lending.

Related readings: G20 to refrain barriers to investment and trade G20 leaders meet with youth delegates  G20 leaders offer insights at plenary session Thousand protest against G20 summit in Toronto

But they left room for countries to move at their own pace and adopt "differentiated and tailored" policies that match national economic or political priorities, a sharp reversal from the unity of the previous three crisis-era G20 summits.

"The G20's highest priority is to safeguard and strengthen the recovery and lay the foundation for strong, sustainable and balanced growth, and strengthen our financial systems against risks," the group said in a statement released at the end of meetings here.

The G20 allowed each country space to decide how to proceed with controversial provisions such as taxing banks to recoup bailout costs and implementing tougher bank capital rules.

The G20, which includes emerging economic powers as well as the developed economies, which is where the economic trouble started, united last year to throw trillions of dollars into the battle against recession.

But that unity has begun to fray as countries emerge from crisis at different speeds and with different policy needs. Emerging Asian economies such as China have come roaring back while the US recovery remains tepid and Europe lags behind.

"Now that the worst of the crisis is past, the dewy-eyed vision of G20 countries pulling together to solve global economic problems is steadily giving way to a more pragmatic approach of merging competing perspectives and agendas to fashion imperfect compromises and make incremental progress," said Eswar Prasad, a senior fellow at the Brookings Institution and a former International Monetary Fund official.

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Hu hits out at 'all forms' of protection

Chinese President Hu Jintao has slammed protectionism and urged his G20 partners to ensure exit strategies from economic stimulus programs will not harm the global recovery.

Speaking at a G20 summit in Toronto on Sunday, Hu took aim at the developed world, saying they should promote international trade with greater openness.

"We must take concrete actions to reject all forms of protectionism, and unequivocally advocate and support free trade," Hu told his counterparts from the G20 group of major developed and emerging economies.

He called for a renewal of commitments from countries not to impose new restrictions on goods, investment and services, and urged his partners to "earnestly follow through" on these pledges.

Amid warnings from American legislators seeking to impose trade sanctions on China over its relatively undervalued yuan currency, Hu said trade disputes should be settled through consultation.

"It is important to address trade frictions appropriately through dialogue and consultation and under the principle of mutual benefit and common development," Hu said.

Hu did not touch on the issue of the yuan's value, but said: "Exchange rates of major currencies fluctuate drastically and international financial markets suffer from persistent volatility."

He also weighed in on the debate between the United States and countries such as Germany and Britain - which are seeking rapid deficit reduction - on how to nurture the fragile global recovery from the worst recession in decades.

Despite its mounting deficit, the United States wants stimulus measures to be maintained while Germany and Britain, worried about the escalating budget crisis in Europe, feel deficits needed to be trimmed swiftly.
Hu offered words of caution.

"We must act in a cautious and appropriate way concerning the timing, pace and intensity of an exit from the economic stimulus packages and consolidate the momentum of recovery of the world economy," he said.

Hu also wanted a shift in the focus of the G20, the premier global economic forum, from coordinating stimulus measures to coordinating growth and from addressing short-term contingencies to promoting long-term governance.

"We should strengthen coordinating of macroeconomic policies among G20 members, keep the right intensity of our policies and support countries hit by the sovereign debt crisis in overcoming the current difficulties," he said.

The sovereign debt turmoil in Europe was triggered by a Greek budget crisis and has threatened to spread across the eurozone, undermining the stability of the euro and the strength of many European banks.

© 2010 AFP

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A bold and calculated move

Malaysia’s global sukuk issue a huge RM4bil success

Tan Sri Wan Abdul Aziz Wan Abdullah

 

THE announcement to launch a global sukuk on May 19 was greeted with a lot of questions, doubts and scepticism. This was due to uncertainties caused by the sovereign debt crisis, particularly in Greece, Spain, Portugal and Ireland, which accentuated concerns over a double-dip recession.

Notwithstanding this, we went ahead with the launch after taking into consideration the factors in favour of Malaysia. These include the strong demand for good quality sovereign debt papers in the market; Malaysia’s credit risk spreads, which had narrowed considerably; the country’s good credit story supported by sound economic fundamentals; and clear economic transformation agenda under the New Economic Model.

It was a calculated and bold move. We were proven right when the issue was oversubscribed by nearly six times the initial size of US$1bil (RM3.25bil).

The issue was a huge success with a final sukuk size of US$1.25bil (RM4.06bil). It was Malaysia’s first in the international debt market after a lapse of eight years and was accorded emas, a special recognition given to foreign currency denominated issues in the Malaysian capital market.

The global sukuk has three objectives: to establish a new US dollar benchmark as pricing guidance for corporate fund raising, to profile Malaysia’s credit story in international capital markets, and to showcase the country as a global Islamic financial hub. The issue successfully met these objectives.

In line with Malaysia’s leadership in Islamic finance, the issue was structured as a syariah-based Ijara − an asset-based Islamic instrument, which pays sukuk-holders returns from the rental of 12 government-run hospitals.

The purchase price is equivalent to the proceeds raised by the special purpose vehicle – 1Malaysia Global Sukuk Sdn Bhd (the trustee/issuer).

It is a sale and lease-back arrangement, where the Federal Land Commissioner as the land owner of the 12 hospitals would sell the asset to the trustee which will lease the assets to the Government. Rentals received will be used to make periodic payments to sukuk investors.

Upon maturity, sukuk holders will be paid the redemption sum through the proceeds received from the Government as the obligor who will purchase the rights, interest, benefits and entitlements on the lease assets from the Trustee. (See chart on transaction structure)

The sukuk was assigned a rating of A- by Standard and Poor’s and A3 by Moody’s. The credit ratings reflect Malaysia’s sovereign credit worthiness backed by a deep and liquid domestic capital market, a well-managed and resilient financial system, strong external position, net external creditor position as well as a diverse and competitive economy.

The global sukuk roadshows started off with a team lead by Second Finance Minister, who met investors in Jeddah, Riyadh, Abu Dhabi and Dubai. The second team led by the Finance Ministry secretary-general saw investors in Hong Kong, Singapore, London and finally in New York, where the sukuk size and pricing were finalised.

During the roadshows, the teams met investors in groups and also had one-on-one interactions with key investors. Investors raised questions on Malaysia’s fiscal sustainability, economic fundamentals as well as the reform agenda of the Government. The teams took the opportunity to explain Malaysia’s economic policies, the accommodative monetary policy as well as impressed upon the investors the reform agenda and growth prospects that will be realised through the New Economic Model.

Fundamentals intact

Investors were convinced that Malaysia’s fundamentals remained intact, with strong fiscal position and credible economic growth from enhanced reform initiatives under the New Economic Model.

These meetings were well-received and generated significant interest among investors in Asia, the Middle East, Europe and the United States, despite increased uncertainty and market volatility created by the debt crisis in Greece.

The high-level delegations were instrumental in raising Malaysia’s profile and entrenching its growth prospects among key investors and decision-makers.

As a result, the issue attracted bids from a diverse group of over 270 investors around the world with most bids from Asia and the Middle East.

The final distribution reflected the wide interest among global institutional investors for Malaysia’s debt papers. (See table on final distribution of global sukuk )

It also reinforced Malaysia’s lead position in the global sukuk market, accounting for 65% of global outstanding sukuk.

The initial proposed size of the global sukuk was US$1bil, which was upsized to US$1.25bil after receiving bids of about six times over the initial cover, making it the largest global sovereign sukuk ever.

The five–year sukuk was priced on May 27 to yield 3.928%, the lowest yield for an Asian sovereign issue in the last five years.

In New York, where the pricing was to be decided, the global markets had turned volatile threatening to scuttle the whole exercise. However, with a strong order-book from Asia and the Middle East, a small window of opportunity appeared when the market stabilised.

Bold and quick decisions were made to capitalise on it. The price “whisper” began at around the Treasury+200 basis points range and the order-book started to fill up and demand momentum was sustained.
With such an encouraging order-book, the pricing guidance was issued at Treasury+190 basis points and finally the issue was priced to yield 3.928%.

The final pricing at Treasury+180 basis points was very competitive, given the uncertainty and volatility of markets caused by the ongoing Greek debt crisis.

The spread on the five-year sukuk due in June 2015 further narrowed by six basis points a day after listing, reflecting robust demand for Malaysia’s dollar debt.

It was challenging to launch and conclude the largest sovereign sukuk ever at the lowest price for an Asian sovereign issue in the last five years. Despite the volatile markets, there was overwhelming response to the global sukuk, reflecting investor confidence in Malaysia’s credit story and growth prospects.

We must sustain this confidence by implementing all reform measures, however painful it may be in the short term. We must sacrifice for the greater good of the nation in the long run.

The success of the global emas sukuk is indeed an international recognition and endorsement of Malaysia’s credit story and confidence in the reform agenda of the New Economic Model under the leadership of Prime Minister Datuk Seri Najib Tun Razak.

“Our sukuk offering was priced at the lowest yield achieved by an Asian sovereign in the past five years notwithstanding volatile market conditions. We also had wider investors base from Asia, the Middle East, Europe and the US. This is a great achievement for Malaysia.”

● Tan Sri Dr Wan Abdul Aziz Wan Abdullah is the Finance Ministry’s secretary-general of Treasury.

Financial literacy vital to achieve high income status

COMMENT By CAROL YIP

THE first report on the New Economic Model (NEM) for Malaysia presents a clear message for radical change in our approach to economic development. The stated goal is to enable Malaysia to reach high income status by 2020.

The National Economic Advisory Council, which came up with the report, recommends that businesses must heighten their appreciation of people as valuable assets that they must collaborate actively with to make Malaysia a sustainable and vibrant nation.

However, the recent announcement of likely subsidy reductions on essential items has raised the spectre of many Malaysians experiencing an increase in inflationary pressure. While there is much commentary in the media focusing on how to help the poor, the aged and middle-income wage earners, we need to collectively and individually solve the problem so that we can speed up the process and reach these goals as a society. The year 2020 may seem a long way off, but nine years is not a long time to achieve these lofty NEM goals.

The Government cannot expect Malaysians to continue showing excellent work performance to contribute to economic growth when we experience personal financial stress in our day-to-day lives. Unless we have salary increases that align with living costs and the Government heightens its efforts to work with the business community, things may stall.

Without the financial security and benefits as envisioned in the NEM goals of “inclusiveness” and “sustainability” to improve the rakyat’s quality of life, the majority of our society will continue to experience a bleak financial future, culminating with an unsustainable retirement.

Stuck in the middle income trap

While the Government is trying to put things in order to help us get out of the middle income trap to reach a high level income society, there is still a missing link. We need to start looking into a national strategy to help Malaysians improve their personal financial literacy and develop the necessary skills to keep their personal financial matters in the proper perspective.

There are several transitions that Malaysians must navigate through as they grow from children, through wage-earner, on to retirement. Each stage requires an understanding of personal financial matters that are sorely lacking in most of us.

Financial literacy is important to everyone. Financial stress is not biased based on race, age, gender, marital status or different income groups. Just because a person might be below the middle-income group doesn’t mean he or she may need financial education more than others. Just as likely, the children of wealthy parents need to be educated to maintain family wealth. Similar to reading and writing literacy, financial literacy is necessary to all. When a nation has a high level of financial literacy, it is easy to promote healthy financial ethics and values across different generations, from young to the old.

What other countries are doing

In 2008, the Organisation for Economic Co-operation and Development (OECD) launched the International Gateway for Financial Education to serve as the first global clearing house on financial education. It seeks to raise awareness to ensure wide dissemination of research, best practices and guidelines and build a worldwide network of government stakeholders on financial education. Several countries, most of whom are members of the OECD, have developed and implemented national strategies on financial literacy:

Australia: In 2005, the government established the Financial Literacy Foundation (FLF) to implement a national literacy strategy. The FLF worked to integrate financial literacy into the educational system, to develop resources and support for teachers and to provide financial literacy materials for the workplace. In July of 2008, all of FLF’s functions were transferred to the Australian Securities and Investments Commission, in order to consolidate the Australian government’s financial literacy response under the Commission and to strengthen its role in safeguarding Australia’s economic reputation and well-being.

New Zealand: A crown agency, the Retirement Commission, led the development of New Zealand’s National Strategy for Financial Literacy, in 2008. The New Zealand Retirement Commission also created “Sorted”, an independent government-funded organisation dedicated to helping New Zealanders manage their personal finances, throughout their lives. In 2009 the Ministry of Education also took over all responsibilities for financial education in schools.

Singapore: The national financial education programme MoneySENSE was launched in October 2003 to bring together industry and public sector initiatives in financial education, to create a long-term sustainable programme to enhance the basic financial literacy of Singaporeans. Through its national MoneySENSE programme, the Singapore government continues to support initiatives that enhance the basic financial literacy of consumers.

The Netherlands: Under the working title CentiQ (Sensible with Money), around 40 partners from the financial sector, the government, information and consumer organisations and science centre signed an agreement in 2006 to work together on financial education. Together, the partners carry out a strategic agenda that includes programmes and projects aimed at improving the financial knowledge and skills of consumers and stimulating an active attitude, so that consumers can make conscious financial choices and become financially competent.

Getting our house in order

Malaysia shouldn’t be left behind. We need a concerted effort to create a national financial education blueprint. Let’s start transforming the nation with a new attitude and mindset by emphasising building a “made-in-Malaysia” financial education programme in schools, tertiary institutions, workplaces, community centres and NGOs.

There are some stakeholders who are already educating different parts of our society according to their core business objectives. A central regulatory body is required to consolidate existing financial education programmes and be the centre of influence to create a national strategy to improve the nation’s financial literacy level based on sound ethics and core values, and in line with the NEM goals.

·Yip is a personal financial coach and also founder and CEO of Abacus for Money