Tony Fernandes CEO Blog

Ever since the pound was forced out of the ERM (European Exchange Rate Mechanism) in the late 80's, I have always had a strong distaste for financial traders. I saw it once again in 1997 when all of us were affected but till this day I cannot understand how the rupiah went from 2500 per US dollar to at one point 20000.

The world has been living with many bubbles over the last 3 years and for anyone who chose to listen I kept telling people that it's all going to come crashing down soon and we will all hurt but no one seemed to listen or really bother. We were all into believing that the growth will go on forever.

Thank god in Malaysia, Bank Negara has kept a tight rein and hence our financial system is strong. The issue I have been having is profits must come from creating real value. Not paper profits.

I saw with my very own eyes how oil went from 30 US dollars to 150 US dollars in just 2 years. How on earth can oil be worth so much more i.e. 500 percent in such a short period? The answer is that financial speculators saw it as easy profit. The actual volume traded was so far in excess of the actual oil consumed. So it was all just in paper. Hedging is supposed to give certainty to oil producers and oil consumers. But a whole new class came in who never even bought a drop of oil. Banks like Goldman Sachs made calls on oil at 200 US dollars. Did they themselves buy oil for that long? Oil went up for any reason. The worse being a fire in one small refinery in the middle of nowhere and the oil shot up to 4 US dollars.

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