September 2008

Bangkok Post; August 17, 2008

Given the enormous importance of this source of consumptive wealth, the steep fall in US house prices cannot but have a significant impact on US economic growth, writes MICHAEL LIM MAH HUI

It has been one year since the subprime crisis exploded onto the US. Since then much water has flowed under the bridge, including the demise of Bear Stearns.

The financial markets have experienced stomach-wrenching gyrations – with many false hopes for a new dawn breaking out. While optimists would like to point to light at the end of the tunnel for the financial crisis, pessimists and realists think otherwise.

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Welcome to Dr. Michael Lim Mah Hui’s blogsite!

Dr. Lim is a sought after conference speaker on International Finance, Malaysian Economics and Politics. He is passionate about his field and looks forward to sharing his knowledge and experience with you!

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Tuesday September 2, 2008

In part two of the StarBiz roundtable on the Penang property secor our panelists discuss concerns over the state’s long-term attraction as a property investment hub and what can be done to enhance the competitive edge.

STARBIZ: What are the strategies that can be employed to make Penang a destination of choice for second home and property investment?

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This paper seeks to explain the causes and consequences of the United States subprime mortgage crisis, and how this crisis has led to a generalized credit crunch in other financial sectors that ultimately affects the real economy. It postulates that, despite the recent financial innovations, the financial strategies—leveraging and financial risk mismatching—that led to the present crisis are similar to those found in the United States savings-and-loan debacle of the late 1980s and in the Asian financial crisis of the late 1990s. However, these strategies are based on market innovations that have heightened, not reduced, systemic risks and financial instability. They are as the title implies: old wine in a new bottle. Going beyond these financial practices, the underlying structural causes of the crisis are located in the loose monetary policies of central banks, deregulation, and excess liquidity in financial markets that is a consequence of the kind of economic growth that produces various imbalances—trade imbalances, financial sector imbalances, and wealth and income inequality. The consequences of excessive risk, moral hazards, and rolling bubbles are discussed.

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