“It’s the economy, stupid” – Part II

This is the second in the series of dire warnings on the financial meltdown thats about to happen that will hit Malaysia like a falling asteroid. And what are the politicians doing – talking cock politics, “Will this dude get enough nominations, will that sucker pull out from the race, will Anwar succeed in his no-confidence vote, will the ghost of Altantuya haunt and prevent Najib from succeeding Pak Lah…. and all that crap. Complicating matters are our country’s leaders who kept insisting that Malaysia’s economic fundamentals are strong (same old rhetorics), rather than preparing the ground for what is to come – slower economic growth, job losses, run on the banks, investment losses of individuals including their life savings etc). In the final analysis its the BN government that will get a big kick in the ass because sentiment against the government particularly in the rural areas will turn negative as many growers and fishermen will`find it tough to make ends meet’.

During Bill Clinton‘s successful 1992 presidential campaign against George H.W. Bush he used a phrase which would be quite appropriate for all those indulging in the current political drama.

“It’s the economy, stupid”

 

Report By Hazlin Hassan, Malaysian Insider

OCT 11 – While the world is reeling from what is possibly the worst global economic crisis since The Great Depression, most Malaysians have been too preoccupied with the nation’s own political drama to pay much attention to the financial meltdown.

Everyone is busy talking politics. The opposition taking over, the opposition not taking over; the PM stepping down, the PM not stepping down; who will become the new PM’s deputy, who will not; is Anwar guilty of sodomy, is he innocent?

Based on the newspaper headlines, many seem to think that the financial crisis only affects the US, Europe, and other countries in the region. Malaysians tend to think that, based on strong commodities and crude oil prices that Petronas is selling, we are somehow insulated from what is happening elsewhere.

Well, if they have been reading reports closely, they would see that palm oil and crude oil prices have also plunged.

Local newspapers have not been reporting the meltdown on a big scale. The coverage is still mainly limited to the business or foreign sections, and tend to present the “official” side of things.

In Friday’s edition of The Star, the biggest English daily, a story on local banks focused on the positives.

The lead story of the business section of The Star said that banks were turning cautious but have not put the brakes on lending to businesses.

It also stressed that the country’s high savings rate and healthy foreign reserves would enable local banks to weather the global credit squeeze.

As a result, perhaps not many Malaysians are even aware of the spreading fear in global markets.

This sort of thinking is perhaps further boosted by the country’s leaders who kept insisting that Malaysia’s economic fundamentals are strong, rather than preparing the ground for what is to come – slower economic growth, and perhaps job losses.

Second Finance Minister Nor Mohamed Yakcob was quoted in yesterday’s papers as saying that Malaysia is unlikely to enter into a recession. He did admit however that “if the crisis creates a recession in the US and Europe, all countries will be affected.”

Mass-selling Malay-language Utusan Malaysia played up Nor Mohamed’s comments and made it their lead story for the business pages, with the headline saying “Malaysia confident will not fall into recession.”

Quoting the central bank, the government has said that both direct and indirect exposure of Malaysian financial institutions in terms of holding of securities linked to the US sub-prime mortgages and lending to entities associated with them, accounted for only 0.3 per cent of the banking system’s capital base.

Further supporting this argument is the fact that the Malaysian bourse also has not plunged to the depths seen by neighbouring Indonesia, which was forced to suspend trading this week after huge falls.

ut observers cautioned that Malaysians must pay careful attention to events happening elsewhere before they end up being taken by surprise.

Some say this time, if the recession lands on Malaysian shores, it might well be worse than the 1997-98 Asian Financial Crisis.

First to go could be Malaysian exports, 20 per cent of which go to the US. A drop in exports could cause major job losses. This would then affect consumer spending and curtail growth.

We are already seeing the prices of commodities fall, particularly fuel and palm oil, two commodities which Malaysia depends on heavily for its earnings. This could result in a vicious bite soon enough unless prices
recover.

A big chunk of the Malaysian government annual revenue, about 46 per cent, comes from the petroleum funds. So falling oil prices could mean the government might have to crimp on building infrastructure and rural projects, like schools and drainage.

Also, many palm oil growers are rural Malays in the government-backed Felda estates. During the Asian financial crisis, the sentiment against the government in the rural areas were negative because many growers `found it tough to make ends meet.

And job losses jumped as electronics factories closed or pared operations. All these means that, like it or not, whether they pay attention to it or not, the global meltdown will soon enough knock on the doors of many Malaysians. – Straits Times Blog

“It’s the economy, stupid” was a phrase used by Bill Clinton’s in his successful 1992 presidential campaign against George H.W. Bush and would be quite appropriate for all those politicians indulging in the current political elections and drama, oblivious to the negative impact the financial meltdown will bring upon Malaysians. This will be the title of a series of compilations, comments and dire warning on the current economic and financial meltdown that’s going to hit Malaysia like a falling asteroid.

Related Article:

Najib, what will you do to help us avert this coming global disaster?

2 Responses to “It’s the economy, stupid” – Part II

  1. Jackie Lee says:

    I was quite dissapointed with malaysiakini. When I try to post some article regarding the financial meltdown to all the readers to be aware what is really happening in our global world financial crisis, someone just left out the article and didn’t post it on malaysiakini.

    Maybe they are going for politics only. They do not concern about financial crisis. I can say that Malaysiakini is a bit selfish. They should know the title MALAYSIAKINI is to update whatever happen in our latest developmeent.

    Saturday, October 11, 2008
    BLACK FRIDAY. THE WORST OF ALL TIME IN WORLD FINANCIAL HISTORY – Malaysiakini

    http://malaysianshares.blogspot.com/2008/10/black-friday-worst-of-all-time-in-world.html

  2. Patricia says:

    Hey there, BangMalaysia

    20% of our exports go to the US and we’re gonna be fine? Cool. Logic ini dari mana, lah?! Sigh.

    As expected, it will be the middle income and poor who suffer the most. As it was in ’97.

    It riles me to see politics and politicians making up the major part of all news in this country! All they do is talk: speechifying here and there, cutting ribbons, andtelling us things are fine.

    But the reality is that nobody is listening anymore. Because they seem to telling us what they think we want to hear – that all’s well. Perhaps the problem started when they tried to think.

    The last time this happened, we had Mahathir. Reviled as he might be now, he got us out of that mess – despite our grumbling and spewing venom at him. This time around, who’s going to set us afloat again? Honestly, tell me: can you look at the current line-up of wannabes and tell me our future is safe in any one of those hands?

    Pat

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