As the New Year ushered in, with economic crisis taking a full swing, I found myself rather tied up and so busy that I have minimal time to concentrate on my writing for the Blog. For that I apologize to readers. I will make it up by sharing few observations that I have made over the last one month:
1. THE WAR IN GAZA: The war was simply the “final gift” by the Bush Administration to the Palestinian people. It was simply with the “silent and unequivocal” support of the United States – the carnage happened. The Israelis took the opportunity while it last and as I have commented to my friends – it will end before Obama is sworn in. While the issues with the Israelis is well known and expected, what upsets me most is that the whole thing happened by virtue of another form of “support” by the Egyptian Government and other major Arab Rulers – by simply giving rooms for Israel to do what it want to do. The sins of “omission” in this case are as big as the sins of “commission”. Regardless of what peace that can be achieved and signed – the war has already breeds the next generation of fighters among the Gazan. The vicious cycle of violence starts afresh again.
2. THE GLOBAL ECONOMY: It is official that all the major economies and the Global Economy are in recession. While this hardly news anymore, given the fact that it has been predicted by almost everyone, the issue that are mounting now are the unemployment levels started to rise dramatically. This will be the most painful and testing period of the recession – as many people are laid off, lost their jobs, dramatic cuts in salary and so on. However, the good news is, the liquidity crisis seems to have bottomed out – there is no further drain on liquidity. But that does not mean that liquidity has improved – it only means that the bleeding has at least receded.
3. THE MALAYSIAN ECONOMY: Finally the Government admits that we are not recession proof and agree that something needs to be done. The funny part however (to show how ignorant and stupid they are) the Finance Minister, through his blog requested that the public provide suggestions to him on how to spend on another fiscal stimulus. I found that as a joke – how in the world would the public knows what needed to be spent; as we all know that so much money has been wasted and spent due to misguided policies. The real solution in my view lies less with the Government spending, given their inefficiencies – but with the Private sector. To boost spending by private sector is best achieved by relaxing the credits. Banks and financial institutions should expand their lending activities as much as possible. This seems to some as a bit radical (especially if you talk to Bankers and Bank Negara) – but in my view, in the current crisis (compared to 1998), our banks are liquid and in a much better shape. This is the time that we need them to come forward (not recede backward by contraction of lending activities due to fear of recession). Expansion of credit will have direct, immediate, and wide ranging impact in boosting the economic activities as the private sector are becoming the real engine of growth. This contrarian approach, in my opinion is even much better and less risky than the capital control approach that was taken in 1998. Off course, what I meant by credit expansion is not by reckless lending activities. It has to be guided with proper planning and execution strategy.
4. MALAYSIAN POLITICS: It seems to me that UMNO and BN always moving towards a new “low” in terms of their position. It is clearer that the internal infighting within UMNO will be one of the main causes of its own demise. The recent Division elections shows how much of these infightings has become so endemic that literally everywhere money is being played as the main factor for vote swinging; rigging and foul play by the leaders is everywhere. The fact that there are more than 1600 complaints has been filed to the Disciplinary committee is a clear testimony to that effect. UMNO/BN with all it might, lost their incumbent seat in Kuala Terengganu – despite the federal and state government machinery, the media and all other means are within their hand- they still lost by a large margin. The main reason again is infighting and lack of coherency and focus. UMNOs people are too busy with their own things rather than winning the seat. Every national leader who came down, use the occasion to campaign for him for the upcoming UMNO election, rather than truly addressing the voters. As I have quipped earlier: there is only one way for UMNO to continue to be relevant – “Creative Destruction”. UMNO has to lose its grip on power (federal) then only all the “bad blood” within UMNO is rooted out; and eventually to reform itself for the future.
5. OBAMA: (The 44th President of the United States). The inauguration was completed with only a minor hitch, whereby the Supreme Court Judge smudge some words during the oath taking and caused Obama to retake the oath in private to ensure there are no legal problems with it. The Fiscal stimulus, while is right, is now being thrown into the typical US politics within the Senate and Congress. As economist, I have no doubt that the stimulus is the right move by Obama and his team. Obama seems to me, is a leader who is trying to develop consensus among the politician, and also his style of leadership is by way of hearing and getting all the advice; before finally making his decision – which is a trait of a good leader. He is born in the Year of Ox, and it seems that this New Year of Ox is probably the right timing for him and the whole world. Let us pray for that to be the case.
6. DUBAI – UPDATES: It seems that the liquidity problem in Dubai is started to thaw. Pockets of liquidity started to appear and slowly things started to move again – albeit slowly and painfully. However the teething may last a lot longer, as many of the players are “first timers” in crisis management. The existing talent pools are not equipped to handle and manage crisis. Many are still at lost and indecisive in regards to what action to take. This will probably cause more damage and definitely lot of time will be lost in the process, which may impede fast and quick recovery. Therefore, they have to brace for more pains in time to come.
7. SARAWAK ELECTION: If I am not mistaken, Sarawak State election should be not too far ahead. If any indication towards changes of the Malaysian political in the future (such as General Election 2012), this would be it. Sarawak is diverse in ethnic background, and by far and large are still way behind in terms of development; the ground swell is quite large as the leaders of BN has been squabbling among them for ages (as part of Taib Mahmud’s strategy to divide and rule) – what they are lacking is a credible leader to unite them as a viable and strong opposition. It seems that Dato’ Seri Anwar again appears to be doing the unifying works. The team that he has announced recently are quite credible leaders from diverse background. I believe that there is a real good