They made assuring statements that our country’s fundamentals are strong, the banks are well capitalised and the banking system is flushed with liquidity and that the nation has a high savings rate, and as such there was no need for any worries of a recession or worse.
This optimism was echoed by the Asian Strategy and Leadership Institute (Asli). Speaking at the media briefing to release Asli’s bi-yearly report on Malaysia’s Economic Perspectives, Datuk Dr. Gan Khuan Poh was reported by NST as saying that he is confident Malaysia will be able to weather the financial crisis to post a 4 per cent growth this year, surpassing the government’s official forecast of 3.5 per cent. Emerging markets such as Malaysia are standing on their own feet to a greater extent than before, especially after the 1997-1998 Asian financial crisis.
Datuk Gan repeated the same economic mantras previously dished out by the government and Bank Negara – “Strong macro fundamentals, a sound financial system, with about RM180 billion liquidity, low foreign debts, declining inflation and a high savings rate that can be mobilised for domestic consumption.”
Asli’s forecast for 2008 was off the mark and had to revise its original figures downwards from 6.2 per cent to 5.5 per cent. The Asli economic team must be wearing blinkers in 2007.
One can be forgiven for lack of foresight, as not everyone has common sense and or the ability to apply common sense in resolving complex issues. But when a person with the benefit of hindsight still gets it wrong, we have to question the integrity of his findings and motives.
The Prime Minister, Bank Negara and Asli cannot be said to be unaware that even the Fed, Bank of England and the ECB have concluded that the global banking system is utterly broken and almost all major international banks are insolvent and world trade has dived.
Neither can they be excused from not knowing that at the recent confirmation hearings of Timothy Geithner as Treasury Secretary by the US Senate Finance Committee, the following testimonies were proffered. If they were in fact unaware, they have no business commenting on the economy, as their views are totally inconsistent with the stark reality. I invite you to consider the following statements at the said hearing:
Paul Volker: “To put it starkly, we are in a serious recession with no end clearly insight. The financial system is broken. It’s a serious obstacle to recovery…”
Sen John Kerry: “People are fond of saying that we have a crisis of confidence. I don’t believe we have a crisis of confidence. I believe that we have a reality crisis. We have a real crisis in the fiscal reality of our lending institutions…”
Sen Bob Corker: “A Zombie banking system is being created. Large banks are insolvent, and need to be seized. Write-downs must be done. The longer we wait, the further we will be from dealing with the root cause. I talk to bankers on Wall Street. They know they are insolvent. We have to face it like adults. Face up to the insolvency. Face up to these major losses…”
The US is one of Malaysia’s biggest export markets and to say that Malaysia will be able to cope with the crisis because of our strong macro fundamentals is gross irresponsibility. I therefore question the integrity of the findings of Asli’s report. It is misleading and gives a false sense of comfort to the people. It should be flushed down the toilet.
I am now throwing a gauntlet at Asli. I hope that they will take up the challenge. It is a simple challenge – at the end of 2009, if Malaysia’s economy attains Asli’s projected growth of 4 per cent, I will donate RM10,000 to its coffers. If Malaysia fails to achieve the projected growth, Datuk Dr Gan Khuan Poh and Asli must donate the same amount to a charity designated by me.
Put up the money or shut up. Stop misleading the public! This challenge is open for acceptance by Asli within two weeks from the date of posting of this article to my website.
What was most interesting was that on the very day of the publication of the Asli Report, Bank Negara dropped a bombshell – the Overnight Policy Rate (OPR) was reduced by 75 basis points and the Statutory Reserve Requirement was also reduced! What a contradiction!
Just this fact alone will be enough to demolish the stupid conclusion of Asli’s report. I refer once again the rationale of Dr. Gan: “Strong macro fundamentals, a sound financial system, with about RM180 billion liquidity, low foreign debts, declining inflation and a high savings rate that can be mobilised for domestic consumption.”
If there is so much liquidity, there is no need for Bank Negara to reduce its Overnight Policy Rate (OPR) by a massive 75 basis points to 2.5 per cent as well as reducing the Statutory Reserve Requirement (SRR) for banks to 2 per cent from 3.5 per cent effective February 1, 2009. As reported by Business Times on the January 22, 2009 the rationale for the drastic reduction was:
“A reduction in the SRR will inject a certain amount of liquidity into the financial system, allowing the banks to lend more to finance economic activities.”
“Bank Negara said that with Malaysia’s growth prospects under threat, the big reductions in the OPR and the SRR were aimed at being pre-emptive in providing a more supportive environment for the domestic economy.”
If as stated by Asli there was ample liquidity, why was there a need to “inject a certain amount of liquidity”?
The Star newspaper reported as follows:
“The sharper deterioration of the global economy is expected to have a greater impact on the Malaysian economy with the large decline in external demand already seen…”
Additionally, Bank Negara said that, “these developments have also affected labour market conditions. Under these circumstances, the urgent implementation of policy measures will be key towards ensuring the Malaysian economy continues to experience positive growth in 2009.”
For the entire 2007 and 2008, the mantra was “all is well as we will not be adversely affected by the global crisis.” Now it is a matter of urgency for policy measures to be implemented! This is the ultimate flip flop.
The first stimulus plan was presented to the country some months ago. But no one has any idea where the money came from and how it was spent. Agatha Christie could not have come up with a better mystery!
Prime Minister Badawi has recently announced that another stimulus will be implemented, to give more liquidity to the economy.
Tan Sri William Cheng, President of the Associated Chinese Chambers of Commerce reiterated that a second stimulus was needed to avoid a recession and that the focus should be on the manufacturing and the construction sectors, these being the areas most threatened by the global economic crisis. Yet, just a few months ago, the mantra was that there will be no threat of recession!
We have also been assured by Bank Negara that our banks are all adequately capitalised. So how should one make of this news report by The Star dated January 24, 2009?
“Maybank mulls over RM3bil rights issue. It wants to strengthen balance sheet to face tough times ahead.
“The rights issue, the source adds, is one of several options being considered by the bank to boost its capital structure. The bank’s total capital requirement is RM12 bil while it has thus far raised some RM9.1 bil.”
Having to expose the several contradictions of the Government and Bank Negara is getting tiresome but I feel compelled to do so as the mainstream media seem oblivious to these policy twists and turns and happily repeats them so as to assist the government to win a by-election.
The days are long gone when the government can pull the wool over the eyes of the public and seduce them with false promises to win elections.
Barisan Nasional is just so stupid. The people are saying in no uncertain terms – “stop the lies, stop the fairy tales!”
The people have been saying this since the March 2008 General Elections, but the political warlords are just too occupied with power grabs and looting the treasury to bother to listen.
Will Barisan Nasional survive beyond 2010?
At this rate of stupidity and self-denial, the ruling elites will be buried for good by 2010!
Malaysian Voodoo Economics Revisited - By Matthias Chang (LATEST UPDATE - 29/1/09)
Up to the date of President Obama’s inauguration as the 44th President of the United States, the Prime Minister and the Bank Negara, specifically its Governor have been most optimistic about the Malaysian economy and her ability to withstand the impact of the Global Financial Tsunami.They made assuring statements that our country’s fundamentals are strong, the banks are well capitalised and the banking system is flushed with liquidity and that the nation has a high savings rate, and as such there was no need for any worries of a recession or worse.
This optimism was echoed by the Asian Strategy and Leadership Institute (Asli). Speaking at the media briefing to release Asli’s bi-yearly report on Malaysia’s Economic Perspectives, Datuk Dr. Gan Khuan Poh was reported by NST as saying that he is confident Malaysia will be able to weather the financial crisis to post a 4 per cent growth this year, surpassing the government’s official forecast of 3.5 per cent. Emerging markets such as Malaysia are standing on their own feet to a greater extent than before, especially after the 1997-1998 Asian financial crisis.
Datuk Gan repeated the same economic mantras previously dished out by the government and Bank Negara – “Strong macro fundamentals, a sound financial system, with about RM180 billion liquidity, low foreign debts, declining inflation and a high savings rate that can be mobilised for domestic consumption.”
Asli’s forecast for 2008 was off the mark and had to revise its original figures downwards from 6.2 per cent to 5.5 per cent. The Asli economic team must be wearing blinkers in 2007.
One can be forgiven for lack of foresight, as not everyone has common sense and or the ability to apply common sense in resolving complex issues. But when a person with the benefit of hindsight still gets it wrong, we have to question the integrity of his findings and motives.
The Prime Minister, Bank Negara and Asli cannot be said to be unaware that even the Fed, Bank of England and the ECB have concluded that the global banking system is utterly broken and almost all major international banks are insolvent and world trade has dived.
Neither can they be excused from not knowing that at the recent confirmation hearings of Timothy Geithner as Treasury Secretary by the US Senate Finance Committee, the following testimonies were proffered. If they were in fact unaware, they have no business commenting on the economy, as their views are totally inconsistent with the stark reality. I invite you to consider the following statements at the said hearing:
Paul Volker: “To put it starkly, we are in a serious recession with no end clearly insight. The financial system is broken. It’s a serious obstacle to recovery…”
Sen John Kerry: “People are fond of saying that we have a crisis of confidence. I don’t believe we have a crisis of confidence. I believe that we have a reality crisis. We have a real crisis in the fiscal reality of our lending institutions…”
Sen Bob Corker: “A Zombie banking system is being created. Large banks are insolvent, and need to be seized. Write-downs must be done. The longer we wait, the further we will be from dealing with the root cause. I talk to bankers on Wall Street. They know they are insolvent. We have to face it like adults. Face up to the insolvency. Face up to these major losses…”
The US is one of Malaysia’s biggest export markets and to say that Malaysia will be able to cope with the crisis because of our strong macro fundamentals is gross irresponsibility. I therefore question the integrity of the findings of Asli’s report. It is misleading and gives a false sense of comfort to the people. It should be flushed down the toilet.
I am now throwing a gauntlet at Asli. I hope that they will take up the challenge. It is a simple challenge – at the end of 2009, if Malaysia’s economy attains Asli’s projected growth of 4 per cent, I will donate RM10,000 to its coffers. If Malaysia fails to achieve the projected growth, Datuk Dr Gan Khuan Poh and Asli must donate the same amount to a charity designated by me.
Put up the money or shut up. Stop misleading the public! This challenge is open for acceptance by Asli within two weeks from the date of posting of this article to my website.
What was most interesting was that on the very day of the publication of the Asli Report, Bank Negara dropped a bombshell – the Overnight Policy Rate (OPR) was reduced by 75 basis points and the Statutory Reserve Requirement was also reduced! What a contradiction!
Just this fact alone will be enough to demolish the stupid conclusion of Asli’s report. I refer once again the rationale of Dr. Gan: “Strong macro fundamentals, a sound financial system, with about RM180 billion liquidity, low foreign debts, declining inflation and a high savings rate that can be mobilised for domestic consumption.”
If there is so much liquidity, there is no need for Bank Negara to reduce its Overnight Policy Rate (OPR) by a massive 75 basis points to 2.5 per cent as well as reducing the Statutory Reserve Requirement (SRR) for banks to 2 per cent from 3.5 per cent effective February 1, 2009. As reported by Business Times on the January 22, 2009 the rationale for the drastic reduction was:
“A reduction in the SRR will inject a certain amount of liquidity into the financial system, allowing the banks to lend more to finance economic activities.”
“Bank Negara said that with Malaysia’s growth prospects under threat, the big reductions in the OPR and the SRR were aimed at being pre-emptive in providing a more supportive environment for the domestic economy.”
If as stated by Asli there was ample liquidity, why was there a need to “inject a certain amount of liquidity”?
The Star newspaper reported as follows:
“The sharper deterioration of the global economy is expected to have a greater impact on the Malaysian economy with the large decline in external demand already seen…”
Additionally, Bank Negara said that, “these developments have also affected labour market conditions. Under these circumstances, the urgent implementation of policy measures will be key towards ensuring the Malaysian economy continues to experience positive growth in 2009.”
For the entire 2007 and 2008, the mantra was “all is well as we will not be adversely affected by the global crisis.” Now it is a matter of urgency for policy measures to be implemented! This is the ultimate flip flop.
The first stimulus plan was presented to the country some months ago. But no one has any idea where the money came from and how it was spent. Agatha Christie could not have come up with a better mystery!
Prime Minister Badawi has recently announced that another stimulus will be implemented, to give more liquidity to the economy.
Tan Sri William Cheng, President of the Associated Chinese Chambers of Commerce reiterated that a second stimulus was needed to avoid a recession and that the focus should be on the manufacturing and the construction sectors, these being the areas most threatened by the global economic crisis. Yet, just a few months ago, the mantra was that there will be no threat of recession!
We have also been assured by Bank Negara that our banks are all adequately capitalised. So how should one make of this news report by The Star dated January 24, 2009?
“Maybank mulls over RM3bil rights issue. It wants to strengthen balance sheet to face tough times ahead.
“The rights issue, the source adds, is one of several options being considered by the bank to boost its capital structure. The bank’s total capital requirement is RM12 bil while it has thus far raised some RM9.1 bil.”
Having to expose the several contradictions of the Government and Bank Negara is getting tiresome but I feel compelled to do so as the mainstream media seem oblivious to these policy twists and turns and happily repeats them so as to assist the government to win a by-election.
The days are long gone when the government can pull the wool over the eyes of the public and seduce them with false promises to win elections.
Barisan Nasional is just so stupid. The people are saying in no uncertain terms – “stop the lies, stop the fairy tales!”
The people have been saying this since the March 2008 General Elections, but the political warlords are just too occupied with power grabs and looting the treasury to bother to listen.
Will Barisan Nasional survive beyond 2010?
At this rate of stupidity and self-denial, the ruling elites will be buried for good by 2010!
Di pos oleh Arbain Muhayat pada 29 January 2009