“Its the economy, stupid” – Part VII

For Patrick Teoh, government leaders who come out with platitudes like, “‘We have some very strong economic fundamentals. And we have very strong reserves. Our trade surplus is still strong… Our savings are also very high…”, well there’s only one word that he has for them and that is “NIAMAH!!!” You may wonder why he’s in such a rage…well if you are then read on.

Next we have a letter to Malaysiakini stating that the coming crunch will dwarf ’97 crisis and what he writes confirms Patrick’s fears.

Finally cult hero, Anwar Ibrahim takes the fight to Parliament demanding that the new Minister of Finance revised Budget 2009 as the figures presented is now irrelevant with the current financial meltdown.

1.  Don’t worry. We are okay one.

Patrick: Niamah!!! What the FUCK?

The last post I wrote here seems to have been slightly prophetic. Less than 2 hours after I posted the article I was informed by the TV station that is currently employing my services that my 7-month contract has now been reduced to 4! The global financial situation was cited as one of the reasons. This country here is ‘officially’ in recession you see. And advertisers probably will not have nor want money to be spent on advertising goods and services that nobody can afford to buy. So, sorry la.

But…but…but…the contract is signed what. We had a deal. No? Yes, but you didn’t read the fine print. It is clearly stated that we (the company) reserve the right to terminate this contract at any time and without having to give any reasons. So in other words…be grateful for the 4 months we are paying you. Now fuck off. You’re standing too close to my Mercedes Benz S500.

And so the 46,000 or so Ringgit that this Malaysian would have been able to bring back to Bolehland and perhaps contribute in some small way to that “strong reserve” mentioned below, disappears in smoke. Actually, there wasn’t even smoke because they strongly discourage smoking in this place.

Meanwhile back in Bolehland the government is telling us that all is OKAY! We are managing much better than the other Asian economies. Our financial fundamentals are strong. We still have a lot of reserves. I believe this is what the sleepy fler actually said…

‘We have some very strong economic fundamentals. And we have very strong reserves. Our trade surplus is still strong… Our savings are also very high…’

Strong economic fundamentals? Do those people even know what that means? Strong reserves? How much? Trade surplus strong? How long do you think that is going to last when the whole world goes into recession and nobody buys what we sell and we cannot afford what they sell? Savings high? Really ah? Even Adam will tell you that savings without sustainable income will fizzle out eventually. Does anybody there have a crystal ball that helps stoke this foolish confidence that we don’t know about?

WE are okay they say. By the way, has anybody qualified who that WE is?



2.  Coming crunch will dwarf ’97 crisis (Malaysiakini Letter)

From John McCain’s perspective the US economy is ‘strong fundamentally’ but was he dead wrong with markets in turmoil, credit frozen/withdrawn and businesses folding up.

Ramifications of recent events portend to a growing belief of a long and pronounced US recession (at least by US standards).

How will this affect us? Some say not significantly, since our exports to US is only 16% of total exports. Our reserves exceed US$119 billion. Our banking system has only 2.5% non-performing loans and remains liquid. We have foreign direct investments, never mind if the net is negative.

That’s self-denial! We will be affected severely and that, too, in the next 9-10 months. Why? Deny as we will, we are an open economy and our exports to the US, Japan, China and Europe will trend downwards – why do they need our products in a recession?

Our reserves will fall with trade deficits, capital outflows, and the ever persistent negative services account. Banks will ‘slow down’ credits, businesses will face lower turnover, and the job market becomes tighter.

For banks, the area that has any semblance to the US sub-prime problem is our consumer lending – credit card, car loans and the mortgage market. It is certainly more resilient than before but remains an area of concern.

What could we do? First, we need to prepare the business community, banks and the people of what could take shape by third quarter 2009 and the year 2010. Next, an economic stimulus package of RM60 billion, spread over three years, for infrastructure development – rail, roads ports, airports.

Within this package should be a stabilisation scheme for the housing, retail and small business sectors. Depositors and banks are assured of full financial support – not unlike the Irish government.

Investors/bondholders rely on new credit enhancements and support that allay any fears of a downgrade/low rating.

Further, we need to organise an Asean-East Asia/West Asia conference to seek a coordinated action on monetary policy and new flows of capital for viable projects and initiatives in the region.

Unless we prepare, plan and act now we will face a severity that dwarf the Asian Financial Crisis of ’97

3.  Anwar calls for revised budget

“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 party 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.


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