The End of the Year (2011)

The end of the year is nothing but an idea
That time has an end and we should all be looking
Forward to it so that we can have a new beginning
Because the old year has been such a mess
And we hope that things will be different
When we symbolically throw away old things
That new things and new ideas will be better
Just simply because we merely want a change
Even if that change is nothing but the same old thing
As we hold on dearly to our same old habits
And feel comforted in our old familiar surroundings
Only our mind may have become a bit different
Now that we have made new mistakes this past year
And surely we will have become wiser in the new year
By not repeating the old mistakes but creating new ones
And so, the newness of our life is nothing but the same
That somehow has acquired a new beginning
But with the same old ending.
Alas! Accept.

The End Of The World?

Recent events around the world, as presented to us by television and the mass media, would give one the impression that the end of the world is near. How near?

Certainly the world ended for the many innocent and not so innocent killed in the Middle East thanks to the US and other military operations as well as by desperate attempts by despots to protect their little pots of honey. The end of the world seems to be closing in on some regimes are deemed to be totalitarian by their people. The best of luck to the despots and the people.

In Europe, the totalitarian of the euro as a single currency seems also to be at the brink of cracking with Germany and France desperately trying to shore up the broken finances of Greece and Italy. That's what you get when you have a lousy civil service that is not only bloated and not doing nothing but doing everything possible to stop the rest of the society from getting ahead. France is the next in line for exposure to sloppy financial behaviour although some say that it's troubles are tied to exposure to Greece and Italy, which is the same thing as bad behaviour isn't it.

I am quite taken by Obama poniticating about the problems of the world without mentioning the problems of the US itself which the American people having enjoyed and now suffering from years or decades of consuming the output of the world paid for by simply printing paper money. This is sheer abuse of its global leadership in monetary policy. I have said it before: Volcker did an excellent job, Greenspan abused it, thereby passing the global finacial baton to China bypassing Europe.

China, onced it has learned financial discipline and controlled domestic inflation, will go for domestic consumption by raising local wages and local agriculture prices and hence to sustainable prosperity through endogenous growth with imports for raw materials from the rest of the world, competing for natural resources around the world for its own internal consumption. Then, it enters an era of bloated Chinese.

Double Dip Or Fallout

It is sad that this has to happen but it has been obvious for a long time - that the structural break of the US economy is now firmly evidenced by the inability of monetary expansion to paper over. We should now expect deflation in the US as it has been in Japan since the early 1990s.

We cannot be thinking about marginal adjustments in the global economy. It is not as if the US economy is still structurally sound and that a sharp depreciation of the US dollar will correct its external imbalance which it doesn't have much relatively. With the rise of China (and India), the US (and Japan) collapses. Germany may hold, but the Euro may break.

The rise of China not only took away manufacturing jobs from the world, but competes with the rest of the world for food and resources. That a billion of Chinese now chooses not to go hungry means food production must rise by 1/6th or a billion people outside China must starve.

Central banks must reduce monetary expansion and direct the new expansion towards food production and away from real estate, stock purchases and credit cards.

Deflation is a needed adjustment after the sustained monetary expansion. This could put more people into productive work to increase output (especially food). This alternative has been viewed negatively as a rise in unemployment which is true in technically unprepared societies.

The Struggle For Power

It is quite interesting to observe how the struggle for power -potentially absolute power - can lead to very desperate acts.

We imagine that the struggle for political power - for Malaysia, and recently for South Sudan (congratulations!) - is made for the purpose of independence - to define one's own destiny - as opposed to be abused as an agent for someone's benefit which therefore all points to a common good that the people of a society can nurture for itself.

The greatness of George Orwell in his Animal Farm is how the objective of the struggle can metamorphosise from high level to more degraded levels. In South Sudan, we are hearing worries over tribal warfare and potentially huge economic survival issues at all levels. In Malaysia, we have descended from an inspired greater commonwealth to one of sectarianism. We have not done ourselves justice.

We thought we started with a fairly good institutional structure of checks and balances, but with a very big loophole in the shape of the Internal Security Act which allows the authorities to detain people without trial for 60 days plus 2 years - which unfortunately has been abused to kill dissent. As a result, the inherited institutional structure devolved into a lopsided one with the power accumulated in the hands of the very top. The question now becomes: How can this concentrated power be opposed or even disposed?

It is interesting to note that with the concentration of political power comes the concentration of economic power. "I say this is mine" and it is his or hers. This phenomenon is being justified as the building up of the war chests of political parties, which invariably is the war chest of the political party of the incumbent government and, by extension, of the few individuals who control everything. With that sense of power, it is extremely difficult to dream of fair play and a more balanced approach to how things can turn out in the future for our country and our people. Thoughts are likely to be focused on "how I can siphon the money out without being caught." (Those caught would be considered stupid and ostracized in order not to damage the whole branch.)

When things come to an extreme, how do we proceed as a country? We can continue to let the system squeeze the juice out of the economy and the strength of the people, inviting inflation to redistribute wealth from the very poor to the very rich through "rapid growth of the money supply and loans at low interest rates." This has been going on. "It is not our fault - it is imported global inflation, crop failures in other parts of the world." The nation stares and justifies as a bystander to this global drama.

There are those who figure that they may be able to provide a change - a breath of fresh air, so to speak. The great beauty of democracy is that everybody has a chance to try their hands at governing the nation. How can one claim to know more than another, except through long years of dictatorship which the modern world is trying to do away with. The answer is really to limit the term of tenure so that ideas do get rotated. Do not believe in dictators however benevolent they are making themselves to be - the world can always be a better place without them.

With flexibility and adaptability and room for change and hopefully improvement, the nation and society can evolve and adjust into an animal that is the product of no one person's mind but that of the facets of many people's views - rightly or wrongly. This is where the storytelling comes in for the nation. This is where the wise men and women and sages and prophets come in to guide the people towards redemption. Lest, we are all caught in the quagmire of our own conceit.

There is no mystery to why private investments here have tanked. It spells how much confidence we have in ourselves. We have abused ourselves, our own people, we have spit at each other. We do this because we still have the luxury of past wealth which is slowly being eroded by mismanagement. We are being arrogant.

The path out of this darkness is the light of trust and cooperation, of exerting our selves and making efforts to serve our neighbours by providing them with goods and services in return for what they can provide for what we need. Whether we should persist in what we are doing depends on the vote of society in the exercise of their right to decide what they want to want and do not want. It is the freedom of choice. It is the demonstration of revealed preference.

Malaysians' Right To (MRT) Speak

The 9 July 2011 Bersih rally is significant. It shows clearly that the ordinary Malaysian citizen is now reduced to nothing but an ant for the authorities who is supposed to look after us to step on.

It is the fundamental right of a Malaysian citizen to raise his or her concern over any aspect of the nation. Not to do so is to fail in one's duty to serve the country. Does the government of the day think that after being elected into power it has the absolute power to do whatever it likes until the next election? Isn't there any recourse in the interim?

Is Malaysia still a democratic country, or is it now a dictatorship, or is it now a police state?

What happens to civil liberties? Or, don't the authorities do not understand any of these things anymore?

The recent event has shown that while the government of the day may put on a smiling face, it may not desist from using crude methods to prevent dissent. This is dangerous.

Of all the transformations that the government is trying to institute to get the economy into high income, I fear that the current transformation of civil society from a once proud society to dirt is probably the most potent and alas! the most dreadful.

Unpleasant it may be to the government of the day, it should have the good of society at heart to let the people demonstrate the seriousness of their call for a clean election, no matter how clean the government or the election commission may insist that it is. Truth will prevail. The recent event in Thailand how that truth will eventually re-assert itself, no matter how much it may be supposed.

I do not think that the government of the day is doing itself a service with its recent actions, with collusion from an authority which should have been more competent and professional in handling such a difficult situation. It is only when a situation becomes intricate that professionals are called in. We do not seem to have any.

Cry, my beloved country!

Six Strategic Reform Initiatives (SRIs)

This latest set of initiatives is to wrap up the New Economic Model, with focus on trying to solve the problems of running a proper government machinery and correct the abuses of the past (or rather, the present). But somehow it lacks the Oomph! for the private sector - which I suppose the EPPs are suppose to be doing.

SRI 1: Public Finance: Increasing Revenue, Reducing Cost
+RM13 billion (contractionary on economy)
Improving tax administration
Rationalising corporate tax incentives
Transparent procurement
Control expenditure
Accrual accounting
Implement GST

SRI 2: Government's Role in Business
Since the government has a funding problem, the government will divest its stable of companies and will only be involved in business in strategic and "GNI-positive" areas:
Regional corridor developments
Procurement of defence technology, etc
Investment in "large growth capital, catalytic or new technology"
Biotechnology, renewable energy, public transport systems, etc

SRI 3: Human Capital Development for High-Income Economy
Minimum wage to be instituted
Talent Corporation to draw up a plan
Unemployment insurance to be introduced
To study labour market
Gender issues
SMEs workforce requirements

SRI 4: Public Service Delivery: Lean, Efficient, Facilitative Government
Remove overlapping processes
Standardise functions
Clear governance structure
Real-time performance monitoring
Real-time feedback rating mechanism
Greater public involvement in high level policy review
"Strategic human resources practices"
Open recruitment within civil service and public-private sectors
Enhancing "cross-moblility" by introducing "mobility characteristics" in new superannuation schemes and enhancing current pension scheme (meaning that civil servants can quit or be sacked halfway through their career and still get pension?)

SRI 5: International Standards and Liberalisation: Improving Malaysia's Competitiveness
Liberalisation of the services sector: healthcare, education, business services (professional businesses)
Standards
Competition law - to promote "competition, private investment and market dynamism" and safeguard against "anti-competition practices and abuse of market power"

SRI 6: Narrowing Disparities (Bumiputera SMEs): Capacity Building Boost
Develop Bumiputera SMEs
Promote wealth creation
Uplift low-income Malaysian households
TERAJU to "lead, coordinate, drive Bumiputera economic participation and to strengthen the Bumiputera development agenda"
High-Performance Bumiputera SME programme
Develop next generation of world-class Bumiputera entrepreneurs
To be able to compete in "open market without heavy reliance on Government contracts"

The Beatles In Mono

I am resisted acquiring the set since its release in 2009, arguing the stereo set is good enough and it is not that inexpensive. After all, it was just another ploy by the marketing guys to extract more hard earned money from the average consumer. But, last week, in a moment of fiduciary irresponsibility (the kids are still studying), I relented and bought it. Printed in Japan.

The mono sound jumps out. The mono sound is clear and tight, with a punch which creates excitement in the music that engages every sense of one's being. The boys are having fun, and I am having fun. That's entertainment.

The old CDs for the first four albums are also mono but unremastered. There is a loss of clarity. The new remastered stereo albums are a significant improvement over the unremastered in terms of definition, but the remastered mono stands out on clarity, tightness and punch. Ringo has never sung so well before, with his drumming a significant contributor to the songs and not a mere last minute addendum.

The brilliancy of the mono over the stereo is therefore the definition as well as the tightness of sound which ensues as one. Stereo, the new technology of the late sixties and early seventies, is an attempt at polarisation with a view to creating a greater "soundstage" at home (as if in a concert hall) - and this could be the manufacturers' way of doubling their sales by selling two speakers at one go rather than one by one. This could be related to increasing affluence where houses and homes get bigger and there is more space in the living room for the income earner to relax and enjoy after a hard day's work in the office.

The stereo tries to create an artificiality of sound through their separation to create an illusion of space. Some instrumental sounds are placed on the left and some on the right, with yet the key ones such as main vocal and drums would be placed in the centre to provide a centrality to the sound right in front of the listener - on the assumption that the listener sits comfortably in the centre in a large armchair. To enhance the illusion - and the ideal - some hifi freaks even suggest drawing the curtains and listening in the dark in order to create space.

The attempt to separate sound goes even further into the quadraphonic (4.0) and the 5.1 for the home theatre (with centre and subwoofer) all now is the rage as people imagine that sound could be given more space through separation and alienation.

Cohesion in sound and the creating of sound can take a more destructive path when the idolised Beatles each could not stand each other anymore (probably because increasing wealth has created increasing intolerance for others' idiosyncrasy) that they are quite happy to each go their own separate ways - and pursue their "solo" careers which, in my mind, though fairly successful were not as brilliant as the Beatles as a group. Each had their own peculiarity which were accentuated to the extent of being a bore, whereas the Beatles as a group was a much more considered attempt at creating good and enjoyable songs for the enjoyment of the public, by paring down on the outrageous and keeping things to the centre of an infinite variations.

The Beatles in mono, therefore, is a brilliant act and piece of work which combines the best of the group and of what is good in sound technology. Listening to The Beatles in mono is an enlightening experience, which shows how the simple and sharing and working together can be good and beautiful. Much better than the dominant of a member over the group or the pursuit of their solo careers.

The Beatles in mono could be a lesson for Malaysia, on how keeping the nation together is such a critically important thing.

The Middle East Turmoil & High Oil Prices

I was struck by this simple juxtaposition: As the people in the Middle East become unhappy because of the difficulties of earning a good living and high cost of living, Iran, with the help of Venezuela, Iraq, Algeria, Angola and Libya, fought against the Saudi's efforts to increase output by 1.5 m bpd and soft the price of oil in Vienna on June 9. Apparently, the opposition comes from those without the capacity to pump more and are thus unlikely to benefit from the scheme. Saudi has the capacity and it can unilaterally do it and gain extra revenue, while helping to bring down the price of oil.

This is quite interesting. That governments do see a difference in the budget and the welfare of the people. The Middle East is in a position to try to lower the price of oil and in effect reduce some inflationary pressures from high commodity prices and hence the cost of living. If their region is in turmoil as people take to the streets, lessening retail prices may help to cool those pressures on the ground.

But this is not going to happen. Governments need a good budget to spend and they do not appear to be spending in a way that will directly benefit the people. The people can suffer and it is none of the business of the governments - so long as the governments can be elected or re-elected into power through strong party membership that takes care only of party members. The people can take to the streets and the governments are quite happy to shoot their own people - just to stay in power.

All this is interesting only if my assumptions are correct. Some may argue that the general uproar in the Middle East is a product of technology and that people are taking to the streets because they now know that can congregate in the streets at the same time. I would not confuse the means with the ends.

There could be another argument that says that people are simply fed up with the same old people in governments and they want new faces with fresh ideas, and they are making these protests with great distress to the physical body as well as the mental anguish and hence no amount of cheap prices will help to quell that unrest. This must be really tough then.

The upshot of all these is that the problem in the Middle East is something that the Middle East itself can solve, by itself. Whether it will or not depends on how cohesive the Middle East communities are among themselves, or they are simply bitter enemies among themselves to the bitter end. If they are enemies, then they are ripe for manipulation from outside the region, and there is great incentive for causing unrest especially when the control of resources is concerned.

There is a lack of intellectual leadership in solving the Middle East problem. If the Middle East is uniquely different from the West, it should strive to exert its own uniqueness and identity. If not, then, the Middle East is no different from anywhere in the world, where sectarianism seems to rule the day with the inability to see the sameness in all human beings to the chief cause of trouble. There could even be animosity among brothers. If this is the case, the problem is pure greed and the scramble for power. We just need one or two evil men (and women).

World: To Adjust or Not To Adjust

The current debate on the world economic condition gives a glimpse of why economics is a very difficult subject to master. There are all the theories, which are fine in themselves because of their own internal logical consistency of varying degree of inclusiveness of factors. The main difficulty is in the diagnosis of the problem, which is subjective and based on experience and judgment. The signs are all there. The difference could be as in the judgments of Dr Watson and Sherlock Holmes (however fictional).

We are all agreed that the world (the US) has gone through a serious bout of asset inflation and the bubble has burst. The adjustment has taken place, not in asset prices but in banks whose solvency has been supported by explicit government intervention. The judgment now is that the worst is over and the world can go on with business as usual.

(a) This supporters of this policy are congratulating themselves that they have done an excellent in preventing an all-out fallout and an inevitable recession which could lead to a depression.

(b) Banks have since recovered apparently and are now back on track to be as good as they had been.

The main argument against this affirmative solution is that there has been no adjustment or that the adjustment is insufficient for real change to take place. Those who had made mistakes in the market (mainly speculators) have not been punished by the market - which the market is supposed to do in order to ensure vigilance and discipline. The same people or type of people are still in charge and playing the game. There is no lesson learnt from the recent problem. The problem will repeat itself because the policy makers are looking for solutions in market behaviours that have brought the economy into problem in the first place.

Real adjustment means structural adjustment where the structure of the market and economy will have to change. There have to be new rules and policies and new ways of doing things. Those who have lost in the market must exit and those who have been disciplined and have capital will have the opportunities to buy foreclosure assets at realistic prices so that a new foundation could be built. In this adjustment, employees will be laid off and they have to readjust also through retraining to learn new and more appropriate skills.

This adjustment is necessary in order that the new world order will be able to come to an organisational structure which will be able to provide sufficient jobs for new entrants into the economy. Whilst in the long run, it may be an observable factor that the demography defines the pace of the economic growth. But, at present, the world is undergoing a truly significant change.

In the west, the baby boomers are now in the sixties and retiring. Being baby boomers, they are the largest representation in the demography. Smaller groups (non-boomers) will have to work the extra hour or so to support the boomers in their retirement. While pensions may be defined in nominal terms, that the inability of the new cohort to produce sufficient for themselves and the retirees mean that (a) there is inflation (if pension payments are appropriate) or (b) there is unemployment among the new cohort (if the aggregate demand is low as the retired boomers reduced their consumption).

In the east, China's increased production of consumer goods has reduced per unit cost as well as increased the global participation in industrial production by workers by a significant amount - which reduces wages (first nominal and then real). This has caused the withdrawal of employment by higher-paid workers in the west. Added to this global work pool is India, in the higher value-added sector of ICT. This sharp increase in the global volume of workers means that the west (particularly the US) has resorted to solving its problem by printing money - which we had seen and still seeing. (Whether they are translating the excess liquidity into rapid loan growth now or not is moot; they had.)

Maintaining an easy money policy is politically advantageous to do. It is like giving morphine. Fiscal policy has run its limits, constrained by common sense about government debt.

I think it was Franco Modigliani who asked the question a long ago in a published paper: Should be foresake stablisation policy, when discussing the relative merits of fiscal and monetary counter-cyclical policies. This question is now moot. We are not talking about stablisation policy. The world has changed. The structure of the world economy has changed. We are now dealing with structural change.

Is it then correct that the US should counter the comparative advantage of China's labour force with a low interest rate for its industries so that its industrial workers can compete - or that has the US actually foresaken its agriculture and manufacturing industries and now focuses on the services sector in order to compete. In the services sector, adjustments could be massive and rapid with a high casualty rate, such as venture capital, stock market, financial instruments, and all kinds of financial products. (It is no surprise that massive financial crimes occur in the US, and elsewhere.) It is also no surprise that WTO pushes for the opening in the east for the services sector.

In globalisation, the problem with using the services sector for growth is that it does not necessarily has to use local workers. Local workers may not be skilled enough or they do not have local knowledge. The services sector, in order to expand, especially for financial services, it has to tap the best brains in the countries they operate. While US firms may grow, US employment may not rise commensurately in that sector. This is the same issue for all MNCs. (It is therefore questionable for Malaysian employment that Malaysian GLCs go abroad and brought back nothing.)

These services MNCs do not need zero interest rate to flourish. They need a policy where credit is easy to get. The banks with their billions of unlent excess reserves would be most happen to fund grandiose schemes by US firms that span the globe.

By not allowing local asset values to adjust downwards, there is no scope for local businesses to flourish as old local businesses could be weighed down by high debt and a long repayment period which chew up revenue and discourage recapitalisation. Those with cash has no chance to buy assets at fair value, and they end up holding financial assets. In a world where excessive wealth is looking for a safe place to park in the financial market, there is always the problem of overvalued of financial assets, as real asset value are kept up by the inability of the market to adjust downward as governments around the world stablised their respective economies with artificial means.

Adjustments of course means hardship and unemployment; but this does not mean they do not exist today when unadjusted. For fear of a flash of pain, one may have to suffer long and quiet.

As economic adjustments are increasingly politicised, it is not surprising that unemployed youth are trying the oust the old and crumbled who are holding to their asset values through long established networks in the only means available to them. Greedy people are trying to hold on to brick and mortar or pieces of paper which enough paper wealth to last them a few generations, at the expense of the new generations of the rest of society. Future values and investments are concepts that need a rethink. In the end, other young people, provided they can get a job, will have to work for the descendants of these old rich.

Economic Readjustment

Those of you who have been following my thoughts here would know that I am quite happy with the recent developments in the economy, i.e., that at least there are some countries such as Malaysia which are beginning to take a stand against the American nonsense (after Japan) of printing money at zero interest rates and holding the world to ransom at gunpoint.

I hope this will lead to a structural break in the global mentality. With higher interest rates, some currencies should strengthen which is a good thing. There should be a way to reflect the weekness of the US dollar. That Malaysia is amon the few countries that go this route is commendabble.

Higher interest rates and a stronger currency may help to restrain some the inflationary pressures coming from the global commodity markets. Malaysia may suffer a bit for commodity producers and the foreign investors who are here to reap the benefits of low wages as a result of the weak ringgit. But these are labour intensive low productivity activities which we could be less dependent on. We should expect some difficulties for these activities. We should expect some difficulties for speculators of properties as well as the stock market. These difficulties are nothing but the needed adjustments for higher interest rates to reduce prices as a result of some difficulties for businesses. Without these difficulties, businesses would continue to live in a dream world of more profits from little efforts and lots of inflation.

These difficulties will be good for making businesses search for higher productivity economic activities. Hopefully, a stronger ringgit will make less unattractive ringgit wages. This may help to reduce the current brain drain and, if possible, to reverse it.

But my great consolation is that with higher interest rates, now or expected, there will be enough fear among speculators. We are now seeing a reaction by speculators in the oil and commodity markets, who think that they may need to reverse their long positions. There is crack here, and the prices of oil and commodities are seeing some selling and a lowering of commodity prices.

This last bit of development, to my mind, is absolutely crucial. The higher global interest rates may mean a weakening of global demand and thus leading to a weakening of commodities prices. If downward adjustment of commodity prices is what the world needs right now. There is a need for the world to insulate itself from America in terms of monetary policy. With lower prices or lower price increases, there is a chance to stablise world politics. When this stability is established, there may be a chance for investments and real economic growth.

Chinese Politics, Economics & Philosophy

What do you do when your government does not take care of you - nay, even have policies carved in such as a way as to disadvantage you so that you do not have a chance?

You fight for an opportunity for yourself and your children.

You are not talking about fairness. You are talking about an opportunity - an opportunity to earn a living, an opportunity to work very hard, very very hard, even to the extent of having to do two or three people's work in order that you may have a chance to earn a living for yourself, taking only one of the lower or lowest of the two or three parts that you have earned.

It is only by sheer hard work, plus lots and lots of ingenuity can it be possible for a non-Bumiputra to irk out a decent living in Malaysia. By then, of course, the disparity has widened much much farther.

When the single simple opportunity in life that one is looking for just to survive does not even exist, because it is perceived that all the opportunities have been monopolised and that the wealth that has been amassed has been transformed into power of control and domination, you want regime change.

How does the minority cause a regime change of the majority in a democratic way?

By giving all its support to the opposite, the best that can be managed is 77:23.

This is the best that can be done at the moment.

But the message is clear. That the people who are unhappy can say register their dissatisfaction.

So far, the non-Bumiputra has made their stance. Now, among the Bumiputra, unfairness of unjust policies has also been taking place. If the discontent is intense, you can get a swing that can go to 40:60 (assuming half turned).

How do you prevent unfairness? Malaysia, and Sarawak, has gone way past the point of racial disparity. We are now entering the era of class inequality: the poor fighting against the rich, for survival. If the rich has gotten rich through plunder, then there is a limit to that plunder. We are reaching that limit. The whole country is down going into economic descent.

The only way forward is a conducive environment for investment, private investment. This is not the perfect solution, but this is the way that the modern world has learned to bear with. This world of private investment, will create with it the problems of worker welfare. This is the economic disparity. But at least, there is a way out by negotiating for better pay and conditions for workers.

At the moment, the problem is unemployment and rising cost of living. Dishing out cash handouts in "poverty-eradication" programmes is a short-term measure, important to prevent riots and buy time for better programmes to come in. It must be the encouragement of local private investments.

The whole nation should not be held back by one lone racist voice. We should fight racism and get the whole nation back to where it was in 1970, and start all over again. We have lost enough time. It is time to put excellence back into the nation, and take our rightful place in bright Asia.

Sarawak Politics, Economics & Philosophy

Politics is about power.

The current political fight in Sarawak today is about the struggle for power. Whether it is the Barisan Nasional or Pakatan Rakyat, both are now trying to convince the voters why they should vote for them and not the other group. So, what is the difference between the politics in Sarawak, and the politics elsewhere?

Between the politics in Sarawak and those in the Peninsular, the current arrangements on both sides of the water are similar - racial political parties conveniently come together to form groups each with a multi-racial front. In Sarawak, on the BN national front, there is PBB which is supposed to represent the Bumiputra which is odd because you also get in it other Dayak groups such as PRS and SPDP which are Bumiputra as well, in addition to SUPP which is generally taken to be predominantly Chinese. On the other Pakatan front, Keadilan is supposed to be a front runner but in reality DAP is the stronger and both are Peninsular-based parties. Appended is SNAP which is taken to have a Dayak dominance.

What you are now witnessing in Sarawak today, as well as in Peninsular, is racial politics at its best. You have grievances even among the Bumiputra where, in the Peninsular, the gripe is UNMO-putra, whereas in Sarawak the culprit is the one and only and his cohorts. Both probably come straight out of a leaf of the NEP. The Chinese and everybody else then see themselves as orphans in an unloved disorganised family with a greedy and roving-eyed father. In Sarawak, the opposition talks of the dilemma of ungrateful urban Chinese juxtaposed against the poverty-stricken rural natives or indigenous people, when the reality may simply be the everyday fight for survival, against poverty or fear of not having enough. There is poverty in the urban areas as well as in the rural. Remember that when the rural people come to town, they become the urban poor. In towns, when the parents did well, the NEP makes sure that they do not have new opportunities.

It is a terrible thing when an affirmative policy such as the NEP has become a racist policy that is used to deprive the majority for the benefit of a few. It is equally unacceptable for the alternative to champion the interests of the now-deprived Bumiputra or non-Bumiputra to the exclusion of Bumiputra. It is this racism in Malaysian politics as well as in Sarawak that is objectionable to rational-minded citizens of this country. For this reason, thereby, my contention is that the current battlelines are drawn at the wrong points by the opposition; it could be the result of the early stages of development in Malaysia as well as Sarawak.

In all countries everywhere and for all people in all countries, the greatest fear is economic survival with eyes being opened wide as a result of the internet where the whole world is collapsed into a picture frame made of plasma or pixels. We know of everything we want to know, and while we marvel at technology, we fear for ourselves and our children. In such a world of great nervousness, there is a great demand for reassurances and governments around the world guarantee it by printing money and getting into massive budget deficits. With massive budget deficits come inflation, now on a global scale, which means that it hits also the poor little indigenous people or the non-indigenous people on the wrong or better side of Borneo. Their home-grown output, be it the processing of local foods or the processing of local materials into tourist items called handicraft, however much they produce and sell is inadequate for them to enjoy a piece of the advances of modern technology as the terms of trade is wrack-smacked against them, thanks no doubt to the multi-award multi-year winning central bank that we have in keeping this country economically competitive while the people deprived.

Under trying localised circumstances, there is nothing but humanity for all citizens of Malaysia, and some say Sarawak, to argue for a level playing field economically at the very least for everybody, be that somebody a Muslim or non-Muslim, Bumiputra or non-Bumiputra. It is time we do away with racism of any guise.

In Sarawak, the two oldest multi-racial parties are the SUPP and SNAP, and their full names say so: the Sarawak United Peoples' Party and the Sarawak National Party. Fill these two parties with well-educated, well-intentioned young and energetic people of all races - if they can work well in other countries and survived, they can do likewise in Sarawak. Let them fight on the economic ground: between big businesses and the welfare of the people. There is much can has to be done to re-position Sarawak which for now, in economic policy terms, is nothing but an adjunct to Peninsular-centric economic (and political) policies. There is a need to refocus on Sarawak as an wholesome and self-sustaining unit rather than merely a supplier of energy to the Peninsular either in the form of oil and gas or hydroelectric power. There must be a way to retain these natural resources for use locally.

I find the current political fight in Sarawak boring on fundamental issues, though not for want of theatrics by masters in their defined fields. But the outcome on 16 April can be devastation of one kind or another.

Capital: Control or Free Flow

It was not so long ago when economic theorists argue that it was OK for people and capital to flow freely around the world, in the belief that it would be favourable for economic growth as well as economic welfare. Economic growth because these people and capital have to work hard to find the extra gain from existing resources - meaning more output and more output. Economic welfare because these people and capital owners have income or extra income and that by things getting cheaper the welfare of the average consumer is improved.

With globalisation and the ICT whereby the flow of people and capital can be made almost instantaneously, the free flow of people and capital can be likened to the unfortunate but relevant image of the tsunami where an extraneous force comes strongly into the domestic system, and leaves just as quickly but in that quick second, the end result is devastation. No matter how strong or how stable, no man-made system can withstand such violent forces.

The unleashing of the manpower of the Chinese people from the grips of authoritarian control to one of a freedom to negotiate and trade has caused an explosion in the manufacturing world where there is little room for the less than competitive. Either you are competitive or not competitive. The export of competitively priced goods by China has made the Chinese people the sloggers for the whole world, with very little for themselves except for the opportunity to work. The capital owners were happy to make that extra cash and they continue to pour capital in enterprises in China. In the meantime, the costs of raw materials rise around the world because of the unprecedented prolonged of China and this is causing the cost of living to rise around the world including China. While the standard of living of Chinese workers can be adjusted by raising their nominal wages, workers in other parts of the world whose livelihoods have been devastated because of their lack of competitiveness have no choice but to look for new political leadership blaming their day-to-day difficulties on corruption of the ruling elite.

US, which has the unique privilege of unlimited printing of its paper money, solves its problem of lack of competitiveness by printing still more money. As China and other parts of Asia as well as some parts of Europe and Africa benefit from the slog of the Chinese workers, those who have managed to obtain the cash that the US is printing choose to invest for short-term gains in those investments without them sinking one cent into a real piece of machinery. These are the short-term capital investors, the investors of portfolios on the stock market. These are the ones that cause havoc on the foreign markets when they come in and out, on the stock market when they come in and out, on the property market when they come in and out.

Economists have long thought hard and long on what to do with these short-term capital flows. Most economists, if not all, have decided against them. How to prevent these short-term capital flows from having a bad impact on the local economy. Sterilisation - how to remove these short-term flows from the banking system. Rise in the reserve ratio of banks - so that banks can create less credit out of these short-term funds. Capital controls - these are the most drastic, how not to allow them to enter the economy at all.

In some countries in the past, Peru, I think - they even try to prevent the entry of long-term borrowings by private companies because eventually they will have to repay and they will chew up their foreign reserves and hence cause a decided deterioration in their exchange rate.

In Malaysia, there was an attempt to sterilise the short-term flows in the 1990s but failed because the central bank wanted to be nice and pay depositors their market deposit rates, and its attempt to recoup from the forex market failed. The second mistake was to use those short-term funds in the stock market for long-term investments. When the funds pulled out, the capital market collapsed. The third mistake was to capital controls to stop funds from getting out of the economy. This mistake was big. It removed all confidence investors has on the government to conduct policies properly. There is nothing wrong with capital controls. If you do not want funds to come in, don't let them in in the first place. If you let funds in in the first place, you cannot trap them and prevent them from leaving. There were other mistakes as well, such as taking the currency out of international trading and not understanding the sophisticated on the forex market. The short-selling that was pushing down the ringgit had to be covered later, and when that happened, the ringgit would have recovered to near its equilibrium which was fairly high because of the fundamental surplus on the trade balance. In any case, Malaysia screwed up and we have not properly recovered since.

The many discussions on the capital flows or controls are interesting but they are by no means simple. It is a sign of the times, that things have been cheapened by their apparent plentifulness - everywhere, things are piling all around us. The only thing we do not seem to have sufficient is green environment for healthy food for us to eat.

International Monetary Troubles

Meeting tomorrow on Thursday 31st March 2011 in Nanjing, when finance ministers and central bankers from the G20 will meet to discuss about all issues except the elephant in the bath tub.

The central problem today with the international monetary system is the balancing of the flow of international trade and the international flow of money. In theory, surplus demand and surplus supplies will adjust so that a balance is always established in the end. Again, this is in theory. In the real world, none of this automatic adjustment exists except possibly in the commodity markets where specific commodities are produced with much competition from substitutes and where supply and demand conditions are fairly easy to predict as they are slow to adjust. Hence, a few traders can corner the commodity markets and hold the poor of the world to ransom, and the only adjustment the poor can make is to starve themselves.

The problem with international monetary imbalance is that, like the poor, deficit countries are under the greatest pressure to adjust only because they run out of credit to spend themselves out of their problems. What do you do when a poor uncle or a poor friend, dying of old age and dwindling income generating capability ask for help - once, twice and we imagine if we allow it, ad infinitum. We answer ashamedly, "I think I have helped you enough" while planning for our next vacation abroad.

One way that an international agency can step in to help the deficit country is to give it some credit when all other conventional lenders refuse to continue to give. The IMF tries to behave like the global central bank with the authority its own currency called the SDR (special drawing right) with funds from the deposits of central banks as "customers". The SDR is constructed like an index number and then its exchange rate determined based on that basket, and translated into the needed currencies like the US dollar for actual transaction purposes. In this way, the IMF steps in to ease the temporary "financial" problems of deficit countries while programmes are put into place the solve the "real" problems.

At the same time, the surplus countries are under no pressure to adjust at all, just like the rich who will only get richer because they have found a strategic advantage to benefit from the rest of the world. That strategic advantage for China may simply be sheer hard and intelligent work for minimal pay, very much reduced consumption and still have surplus to keep. It is simply a question of lifestyle, of a way of life. The poor may not be the destitute but simply those who have sufficient and who overspend. It is still lifestyle and bad habits. Do we then discipline the hardworking and be lenient with the spendthrift. It is not exactly that the US is poor and China is super-rich. Intra-China, there is also an imbalance where the rural poor worked hard for the urban capital-rich for the enjoyment of the deficit US consumers who pay for things with computer digits.

So, what are the adjustments or what are the "real" problems. Is it an exchange rate problem? It was OK before, but now it is not OK. If a people have worked so hard and so long to enjoy a bit of luxury, do you then ask them to adjust their currency so that they will have a work harder and enjoy less. Do you not ask the deficit country people to find new ways of doing things and produce new stuff so that they may have a fighting chance with selling their wares. Or do we allow specialisation of countries where countries like China, Japan and India produces real stuff while European economies produce financial crises.

Or, do we think that surplus countries will translate all their foreign reserves into domestic currency and flush the economy with cash in the real estate and the stock market. Or, do we not think that they will use the US dollar to buy US assets in the US - which the Japanese did in the eighties.

Or, are the issues to be discussed at the G20 really more about strategic issues such as not letting the East conquers the West just like the way the West had previously conquered the East. Is it not really about fearing the huge immigrant population in the US and Europe will forsake those countries and the productive but fluid labour force will float to the most competitive countries in the world and reforce the success.

Against such fundamental issues, we will find that the G20 could just be a meeting to air some issues "of global monetary importance" and then return home to placate the population that something has been done and things will take time to happen. In the meantime, adjustment is a slow cook.

Self & Society

Those of us raised on Western philosophy are very clear about the right of the individual, how an individual like ourselves, no matter how basic or poor, is still a countable entity which has the liberty to exist in the best way that we each see fit so long as we personally do not become a nuisance to anybody. This idea of the autonomy of the individual comes from the idea of the existence of the self, where we each like a light bulb can glow quietly unperturbed in the intensity that we have the energy to dispense.

The exertion of the right of the individual self does not in any way automatically leads to the conclusion that the individual is selfish. To be aware of the self is very different from the inclination to always and only look after oneself. Selfishness is that narrowness derived from the unenlightened view that to stay alive is the raison detre for living. Staying alive is nothing but a fallback position when one has nothing else better to do in life. That is why there are individuals who climb rocks and tall buildings and high mountains, and others who dive into the deep dark oceans or float in the deep dark space. There are also others who simply walk into very dangerous places in order to get a job done to save other lives. It is this right of exertion to live or die or suffer in between that defines the character of individuals who under normal circumstances may live lives that others may not even notice. Heroes are born of individual selves who could have been selfish but instead rise above the consideration of the body and dedicate that body to an act that may just for a moment make ordinary life possible for ordinary people.

We have seen before our own eyes, and experienced an era of the destruction of whole societies by a few individuals for the benefit of the few individuals in the name of progress, rapid economic growth and full employment, as well fairness and equity. We have seen how new inequalities are being created out of policies which explicitly and purportedly tries to redress imbalances and injustices and only to find the ideals slipping through the fingers of those who try to command the earth to stop moving. These selfish individuals, nursing enormous egos, try to use sweet words intersperse with threats to cajole societies to dance to their tunes and in the process redirect the flow of the social efforts into their own pockets finding excuses in the shape of building monuments to themselves. These individuals are asking individual persons to sacrifice their lives so that these leaders can add greatness to their names, at the expense of the faceless toilers. That the powerful can enjoy opulence when the masses starve is the invisible hand that is redirecting scarce resources through the inflationary phenomenon.

At the Fukushima nuclear plant, volunteers were sought and obtained in experienced workers who willingly with eyes wide open go into the inner sanctum and be blessed with the light. By this single charitable act, they have vindicated themselves from all the sins that they have committed in words, thoughts and deeds in the past, and in the process salvaged their souls. They shall suffer and so shall their families, spouse and children, but they shall have pride for the rest of their days. It is in moments like this when we can reflect and realise how we in our little excuses are nothing but petty selfish individuals bent on lying to ourselves and those who will listen to us so that we may maintain our little arrogance deep in our hearts.

The Uselessness of Predictions

Whole industries have sprung up over the centuries for the mere purpose of predicting the future, from the vestal virgins of Delphi and witches of Scotland to star gazers, face/palm/foot readers, statistical manipulators, scientific safeguarders, trend discerners and inspired third-sense charlatans.

When all potential faults and problems are properly identified and resolved, everything goes on so smoothly that it is presumed that that which have been hard at work and keeping everything in tip-top condition are but irritations because of their apparent presumed self-importance which is making the incompetents extremely insecure and jealous.

There is really no reward in forecasting except when one is making plans for one's own life journey. Even then, there are those who argue that there is no need for planning and everything will end up in the best of all possible worlds, so long as we accept whatever comes. For those who have no experiences of good things coming by themselves on their own accord, without effort on one's part, this is an uneasy and possibly traumatic attempt at relaxation. In an organisation or society, the politicians will always short-change the technical people in order to exert control over the experts. Under such repressive conditions, it is likely that the technical upkeep may just be a notch below the necessary as a form of sabotage in retaliation to presumed injustice. Such perverse behaviour may even be observed in children when they underperform in order to hurt their parents. First hand, I tend to try to identify potential problems long before they surface, so that easier milder remedial actions can be applied earlier, but have more often than not been labelled as a person who sees problems where none exist (for the moment). My standard response is this: "I hope I am wrong. If I am not, you are in deep trouble."

But there are things in life that are self-evident who do not need a rocket scientist to predict and which every sensible ordinary person with some common sense will tell you will happen, as a matter of fact: (1) You will die. (2) Human beings will disappear from earth, just as dinosaurs had. (3) You make bombs, bombs kill people. (4) Nuclear plants will blow up.

For natural phenomena such as (1) and (2), there is nothing much that one can do except to accept the inevitable, although most of us will still try to stretch things at the margin just a little more (just like home renovation). You find people popping pills (me included), exercise, and resorting to all kinds of activities of some sort, wasting time in the hope of gaining some, which is nothing but the swapping of young energetic time for a longer weak and frail condition.

Man-made phenomena such as (3) and (4) are simply the foolishness of human beings, of a small group of people harming the whole of mankind just because society at large allow a few foolish people to take control over the majority just because the few claims to have the right or sheer brute force to exert that power.

Will there ever be wisdom at the top, when the foolish thinks that status and position bestow upon them wisdom which they do not possess. The jostling for power and the scrambling for titles are things that foolish people do to feel self important. Even erstwhile perfectly good individuals when they are feeling ordinary and are wise seem to have lost their wits the moment they enter halls of "monumental historical importance." When they do not deserve the position, we will find that they generally will destroy the sacredness of the place through the corruption of its integrity.

Because of the foolishness of individuals, we can only allow each individual a short period of time of time to display their foolish the moment they step into power.

Zen & The Japanese

How do the simple teachings of the correct method of realigning one's psyche to the cosmos by a foreign teacher in a foreign land can so readily be accepted by the xenophobic Japanese who then made them distinctively their own? Is it because those teachings fit exactly into the Japanese shared experience of Earth and how Mother Nature can both be giving and neutral.

Zen is the end-result of the teachings of a 6th century master who went to China to correct the way for practicising Buddhism. There was much doggedness and flippancy, and the way out was flexibility and focus. That flexibility which juxtaposes prolonged silent sitting with controlled focused movement and the later gives rise to the famous Shaolin monks. The focus is made in all conscious efforts, whether it be sitting or moving, and the first trick is to understand and accept what comes without acting further to aggravate the situation, and the final trick is to understand that it is all in the mind and nothing else which could in modern science be simply called "neutral".

The big name in Chan is Huineng who was a butcher who left his poor old mother to the care of neighbours in order to work in the kitchen of the temple. Huineng demonstrated his understanding with a few lines on the wall scribbled in the middle of the night, whose handwriting the master recognised who then gave him the authority to be the next master and told to leave the temple immediately that very night so that the competitor could not kill him. From Huineng arose several schools of Chan, and it was the Linzi school which probably had had the biggest influence on the Japanese, who enunciated it as "Zen". I highlighted Linzi because it is the school which beats its disciples with a stick during meditation if the master finds the disciples to be drifting.

The Japanese make a big deal out of Zen because they are perfectionist. If they really want to be "truly unperturbed" they must make a real effort in a equal and opposite response to what must have been a terrible environment for them - the warlords, the serfdom, the fightings and wars, and servitude in addition to natural calamities such as volcanoes, earthquakes and tsunamis.

The extreme nature of Japanese stoic-ness could be a Malaysian perspective, as we tend to be soft and forgiving, not only to others but particularly to ourselves and our communities. Everything seems to be an excuse for a good giggle.

In Zen, the final lesson is this: In the face of even the most unpleasant external environment, the only response is not to respond. "Be a stone", as an ex-Japan resident used to tell me. Keep still, do not react, do not retaliate - not only in body, but also in mind and spirit and soul.

I think it was only with the deepest inability to contain his emotion when the Governor of Fukushima, Yuhei Sato, said on national television on 16th March 2011, "The worry and anger of the people of Fukushima has been pushed to the limit." This is very unZen-like, but how poignant.

The Liquidity Trap & How To Fund Spending

Economic theory has advanced so much that the Keynesian-Monetarist dichotomy is blurred. Economists today can think freely about fiscal policy (with monetary implications) and monetary policy (with fiscal implications) interchangebly. In the end, spending and pumping money into the system are quite the same however you dice it. The illumination from Keynes has been to be able to accept deficit-spending as a way forward. The unfortunate thing is that Keynesian policy has reached its limits apparently, because of limits placed on government deficits by buyers of government debt. The Japanese answer to this debt limit is to bypass private debt purchasers and just ask the central bank to print.

But what I really want to discuss in this blog is Keynes' famous concept of the Liquidity Trap. This is economic psychology. The economic assumption has been that when people have money, they will either spend the money on food or buy a guitar or save it and invest it in bonds or equities or buy a house. Somehow, by putting more money into the system, people will spend or invest and somehow generate economic activity. Under normal circumstances, monetary policy works. By lowering the interest rate, people borrow more and spend and get the economy going. In the process, money is created.

The Liquidity Trap kicks in when people suddenly become fearful of the uncertain future, and they start holding onto cash. This happens they expect prices to fall - no point buying now when things can get cheaper later and get a bargain. The Liquidity Trap comes in when deflation is expected to happen or is already happening. It's like catching a falling knife. When there is a Liquidity Trap, lowering interest rates do not work to stimulate the economy and this is when governments have to spend and arrest the decline in prices.

For years, governments have been arguing for stimulus packages in order to kick start a depressed economy and get inflation going. This is jolly well and good. Now, the problem is when stimulus packages are no longer virgin policies and they have been used and abused for decades. Prices run off and people are happy making tons of money without too much hard labour except speculating on shares and properties in the comforts of a cozy office.

In the past, banks used to be responsible especially after having gone through the recession of the thirties and the inflation of the seventies. Banks were prudent and had their internal checks and balances. Most banks were owned by private individuals, with a personal stake in its fortune. By the eighties, many banks went from European/UK type to US type banking where the CEOs were and are just employees out to make a quick buck from their bonuses calculated on loan disbursed but not necessarily repaid. An untrained banker can become very rich by blindly giving out loans and targeting high loan growth. The only thing you need is a collateral and collaterals can be created everyday if you are giving out loans for properties.

When the game of rapid loan growth funding property purchases hit its limit when there are no more housebuyers, the mortgage market gets into trouble. Because deposits of the public is at stake, government stepped in to save banks and this can be done if the property market is not allowed to adjust downwards. Property prices are kept up and loans kept on the books but there is no extra cash to lend to other users like businesses. The banking system gets caught in a quagmire.

Governments print money to save banks from collapsing. There is no threat of inflation. In this case, there is a threat of deflation from property prices. It is this threat of asset deflation that is being used as a justification by central banks around the world to print more money in an effort to the save the economy.

With property asset prices being kept up, rental prices continue to be high. Housing prices remain unchanged; they may even rise as more money is being pumped into the system and banks try to show a profit with more loan growth. Those who do not own their homes still have to rent and pay high rentals. Businesses pay for high rentals of their shoplots. For the ordinary people, food prices continue to be high as the global commodity markets go crazy on biofuels and natural disasters as well as on sustained growth in China and India.

The unfortunate case of Japan today given the earthquake should give Malaysians a stark lesson in economic efficiency. It is really not a clever argument to say that economic efficiency is not important. The natural disaster requires that scarce resources of the Japan government has now got to be re-deployed into replacing what is lost rather than build more on what already exists. All additional resources will be used to recreate new towns and new villages and new facilities. But for the Japanese, all will not be lost. They will rebuilt a new system which will be far more superior from what they had lost. What they have now lost in structure will now be replaced with greater efficiency. Japan will recover, and it is the efficiency and determination of its people that they have my greatest respect as economic creatures.

Japan Earthquake & Tsunami: Does It All Matter Anymore?

To watch the unfolding of an on-going tragedy in the warmth of one's home is one of the most uncomfortable senses of being that I have ever experienced, so far. The tragedy that is hitting Japan today is a sad moment.

Christchurch and the other earthquake incidents were one-off. There was the quake, and a few tremors. Or, there was the tsunami, and all was gone. But to watch the earthquake and then the tsunami and then the unsteadiness of the nuclear plants and to see crowds of people with nowhere to go, hungry, cold and lost, and then to see the plain devastation of an entire village and town where thousands used to live and are there no more, that scene in my mind is the most heart wretching.

I watched the unfolding drama with my Japanese friend and his wife. They had the nervous laughter, unable to show their sadness in front of their guests, and forever trying to play the perfect host and hostess. Their two boys and a girl are in Tokyo and in the initial hours they could not keep contact. Finally, they found one son walking home seven kilometres, the daughter squeezing in among friends in fear, and the youngest son could only responded: "What, OK!" They have a fallout with their youngest son and my friend concluded that the one consolation of this disaster is that he and his wife could at the very least have some form of communication with their son.

I said to my youngest sister who I discovered has already passed forty when we were watching the tragedy on TV that this is a tragedy only because of the insignificance of the lives of human beings. The earth is nothing but a ball of fire and the other layer has cooled to form a crust which is in a constant state of flux, like the skull. The movement is constant, but in human terms, this is what the engineers called a once in a hundred year event. Well, if a moment for the earth is a hundred years for humans, then our individual lives do not last more than one moment each, in global terms, and probably far less than in cosmic terms. We are like insects that are born in the morning and die by night fall. And what do we do in this shortness of time. We fight, we lie, we cheat, we become generally unhappy with ourselves and everybody else. How silly are we all!

So, there is no big deal to this former prime minister of our who has again distinguished himself by writing a book of lies to justify his wrongdoings, and calling everybody else names. I have find it extremely unpleasant for supposed educated young and old men and women to degrade themselves as intellectual by extreme forms of arguments when good manners should have prevailed. Instead of focusing on the subject matter, they would focus on character assassination and calling people names. Sticking labels on people is one the easiest and lowest forms of human communication and I can see now where our young people are getting their bad manners from. Economists, unfortunately, have become extremely ill-mannered ever since Keynes published The General Theory. He argued that in order to get his argument across and to break through a tough convention, he had to be rude - in his words, to "convict" his opponent. Since then, economists have acquired very bad manners in their talking and writing. I have learned this little thing from my Malay colleagues when I was working in a major bank. The executive director told me: "You might be clever, but you must make people accept you first." I am eternally gratefully to this person, who unfortunately had fallen into disgrace due to his lack of good judgement in his work. If you want to know why economists do not agree, it is because they are rude, no matter how brainy they may imagine themselves to be.

So, what about the economy? I have refrained from making any comments on the economy because I have already said what I have wanted to say about it. The global economy stands in ruin because of the reckless pumping of fiat money by the irresponsible Fed of the US. That extra money is being used to keep its economy by the propagation of war around the world. The mountain of extra printed money flooded rapidly through the financial centres around the world making arrogant stockbrokers and bankers. They lend recklessly to speculators on real estate and financial assets. The pumping of more money to prevent these asset markets from correction and downward adjustment is now being lauded as the saviour of the global economy because economists do not have any new ideas to solve this economic disaster. Any correction of the asset markets would be a political and human disaster. The global economy now swims afloat a sea of greenbacks trying to find dry land. If the stock markets are recovering, do not believe that the global economy is recovering; it is bad money looking for good avenues to surface. In the meantime, China suffers from its own success and the world suffers from the scarce resources that China has the money to buy.

We know from history that the great wars are started by massive inflation especially with respect to food so that whoever or whatever promises to put on the tables of hungry fathers and mothers and brothers and sisters, there is a revolution waiting to happen. China is not like the Middle East or the rest of the world, because China is communist and communists are supposed to live and die for the rakyat. China may yet find a narrow path out of the world of contending factions.

Inflation & System Change: No?

Regimes in the Middle East change because people are fed up with the same old politicians with their same old ideas of stability and making themselves rich while the rest of the people cannot find jobs or are in jobs with steady but low pay while food prices have skyrocketed.

Of course, the chief cause of very high food prices is the natural disasters and crop failures. There is a shortfall in the supply of food and prices rise to ration the supply to those who have the purchasing power to access the food. In other words, the supply of food in the world is now distributed more among the rich and away from the poor. (The poor even with their pooled resources would have have a limited access while the rest falls on the tables of the well-to-do.)

Does it help to restrain demand growth? If slower demand growth will create less jobs or less to higher unemployment, then the poor with continue to suffer. So long as there is a shorter of food supply, the rich will bid up the prices until they get the quantity they need. By slowing demand growth, if the slowdown is marginal, its impact will be much more severe on the poor (who have no cushion) than on the rich (who do not have a cushion problem).

The only way that prices can really adjust downwards is through a severe depression whereby not only the poor will be jobless with no cash but the so-called rich will be in trouble with their cashflows and their investments. Banks will also be in trouble again. This is a shock scenario which is unwarranted. The problem is a shortage in food supply and the solution is to replant the acres lost to the floods or weather. Time is the cure.

How ironic then that it is the weather and the floods that bring about the downfall of old regimes, as if it is the straw that broke the camel's back. It is as if the almighty has decided that the old regimes have stayed too long and decided to give the poor masses a helping hand. Would there be a new regime or an old regime in a new bag.

But didn't sustained rapid growth in the money supply of the reserve currency awakened the sleeping dragon which had slept for half a century, and decided that it will not go hungry any more. Surely China is big enough to absorb all the money that Greenspan could print at high speed for a decade or so - and China grew just as fast and as long. Along the way, short-term money flowed through all the financial markets around the world, awaking stockbrokers and the real estate markets, and everybody suddenly became rich and corrupt without much effort. No, of course, the growth of asset prices are consistent with so much percentage point growth per annum, while wages among manufacturers remained low thanks to the newcomers from China. Global wages threatened to adjust downward to Chinese levels - at least this was what MNCs threatened their workers outside China while Chinese workers apparently gladly suffered in silence of their newfound economic opportunities.

So much water had flowed under the bridge. The global economic depression that promised to surface didn't happen as Bernanke cleverly staved off the threat with extra cash. All nominal values stayed about the same, except for some unfortunate real estate but temporary. The world is saved from a horrible adjustment which had been sorely needed to readjust global and local economic power. Everything stayed the same more or less, except for the food prices, housing rentals, transport charges - all the things that a poor man and his family needs everyday.

Effecting Change: System vs System

When I was earning a living making forecasts, my emphasis was on forecasting turning points, not projecting straight lines. Projecting a straight line (in any form) is the dumbest thing a forecaster can do - the only judgement one can make is how straight is the straight line. One cannot really forecast a straight line; I contend we can merely project it. To me, a line will continue to be straight (or sort of) until something happens that causes it to go off its trajectory. Normally, people assume a straight projection (that life will go on as usual) until the expectation is proven to be wrong and then ask what happens. As forecasters, we have to know what are the key parameters which give rise to the existing situation, which key parameter is likely to change first and when that happens what happens next. In the mind of a forecaster, therefore, the main task is always to assess the integrity and condition of the key parameters as well as to look out for any extraneous factors that are likely to intrude into the system which will alter the whole picture. In the end, the quality of a forecast rests on judgement, based on the experience in the assigned field as well as the breadth and depth of knowledge of the world around him or her and us.

Living a good life is living a boring life, as boring as projecting a straight line. Same thing, day in and day out. Nature is boring. One can make one's life a bit more interesting with variations around the same theme. Today, I eat steak instead. The system does not change; our activities change. When the system is stable, we can dream - about how we are going to make progress in life through material acquisition so that we can show off to our friends and relatives - and we take our time trying to accomplish our vision and mission, step by each of our own slow and painful step. The system is in equilibrium, probably static equilibrium (in and around the same area more or less like some nomadic tribe in the jungle) and if lucky dynamic equilibrium with ability to accommodate population growth with sufficiency which in most societies is termed prosperity. Systemic equilibrium is crucial to happiness, no matter how much people may gripe about the ordinariness of everyday life which is really a liberty that only happy people can indulge. The English complain about the weather, and monks talk about the dreariness of mundane life.

Let us now introduce trauma, otherwise and now popularly known as change. We shake the tree vigorously and see what falls. We bonsai the branches by twisting and turning and telling people what they can and cannot do or how they should do things in order that we may create a brave new world by transfiguring the present. We imagine a better world, but we end up in the end with the same old dullness, sometimes kept interesting only by the unannounced potential threat to our soundness or mortality by some madman in power keen to stay in power forever, at whatever level of hierarchical structure that has somehow been erected all around us. In effecting change, the easiest way is to replace a lousy system with another lousy system. This is when reformers are unimaginative and uncreative. They see a lousy system, and wanting to replace it, end up giving the same lousy system except for some suggested modifications which hopefully give better results which did not quite materialise which then leads to another call for traumatic change and another sameness.

If therefore we are going to get the same system (albeit with modifications), we might as well determine what that core system is going to be and strengthen it. In most human systems, the core element is the absolute right of the individual and of all individuals, each same and equal in terms of right. The right to freely think and speak and associate and contract and exchange and indulge and believe and practice. The right to live as humans. The underlying structure of any human system must be founded on the recognition of these rights, and institutionalised. Once this core is corrupted, change will come after change. In order that the system will transition over time through the generations, this change can also be institutionalised so that not one person or a group of individuals can monopolised an entire generation. The call for change through rallies is usually a rally for generational change when an individual has been dominating an entire generation. In building in the required change and transition in the system, there will be scope for creativity in government when individuals or groups can propose newfangled ideas. In the end, however, when prosperity has been bestowed on the society, there will be fear over the protection of the people's assets and if the assets are not so fairly distributed, problems of the unemployed and the poor. The final battle in the capitalist world is always the fight between capital and labour.

Traumatic systematic changes are costly to social property or capital and they should be avoided if possible. If not, it may be the only way out. But there must always be a system to be put in place or else we will have no social cohesion.

Change: Breaking Point , Turning Point

Obama brought the word "change" to current circulation. meaning "revolution". He could have been inspired by the parking vending machine which says "change is possible". How does change occur?

In general, people do not like change because change implies uncertainty. As I understand it, the whole economic apparatus that people have erected around ourselves is to reduce uncertainty and to create stability of some sort. So long as the existing apparatus is still workable, people will maintain it until there is a critical mass of sufferers of the system who then demanded that change be made of the apparatus or system or paradigm.

We can see very clearly that political change will be brought about by the masses of ordinary people when their quiet suffering and despair could no longer be tolerated, when what they see around them is unbearable daily difficulties in the face of opulence - which indicates to them somehow that it is a systematic problem, not a natural problem. Nature can of course make things worse, but in a stable system natural calamities by themselves do not call for structural breaks as they create uncertainty; if they have faith, they want the system to help them, as is the case now in Australia with politicians shedding tears for ordinary people who are suffering from the natural disasters. It is when the prevailing system is seen to have lost its integrity which means that the integrity of the system has been corrupted that ordinary people rise to demand the obvious - that the system be improved or, better still, changed. "Improvement" to a corrupted system doesn't usually bode well because it usually implies that the "second tier" will simply "move in" to take over the "first tier" as well as to take care of the "first tier" which has somewhat "gracefully" made way for the "second tier" to come up to the podium. As we know from the computer, once the system has been corrupted by viruses, and if the corruption is severe (which must be in the cases that we are talking about), then we need to reinstall a new system. Those impoverished may install the same old system which is not the wisest thing to do because it has been shown to be easily corruptible. A completely new system is required to be installed, as in the old system with new safeguards or a new system with a completely different platform or paradigm altogether so that the viruses as we know them to do be cannot penetrate. In the realm of politics, the opposition to the incumbent government is usually of the same mould except that it is the opposite. The real challenge for change is to come up with something that is completely different from the incumbent and the opposite, and in the comfort zone of human horizon, the third force is usually a synthesis of the first two (acknowledgment to Hegelian dialectics). I prefer the George Bernard Shaw vision: People see things as they are and ask Why?; I dream of things that are not and ask Why not? In this way, we truly move forward and beyond the ordinary, meaning beyond what we are used to.

As in politics, economic change can also be traumatic. In the world of economic theory that many of us grew up in, the economic change is very much Victorian - small little marginal changes (mathematically called perturbations) which do not really upset the system at all, merely to test the robustness of the system. What happens when the system is not robust? The system breaks down, and a new system has to be reconstructed from the old model or constructed completely new from scratch. That is in the world of economic theory. In the world of economic reality, what happens?

In the world of economic reality, when the economic system shows any sign of struggle such as the rattling of some parts, the political masters, being control freaks, instinctively try to and usually do takeover the economic system completely. This is usually done by a process called Emergency Rule when the system is deemed to be at the very breaking down and the Master must now be "hands on" to smooth things over. As when a non-doctor tries to cure a (severe) headache with blind prescription of panadol, likewise in economic policy, the non-economist blindly prescribes monetary expansion as the cure for all economic headaches. Central bankers in trying to please their political masters consciously try not to trigger off any economic adjustments in order the central bankers not be blamed for any consequent crisis that will be created later on. When this happens, it is a sure sign of weak leadership or technical ignorance in both the political and the economic policy arenas. As in medicine, if an illness is not cured immediately at the root (preventive medicine) while merely plastering over the obvious symptoms, we have been taught that the illness is going to become very bad and can even become life threatening. In economic policy, we know that when the root economic problems are not properly resolved, economic adjustments will be forced onto the system and explode. The 1990 Japanese Asset Bubble, the 1997 Asian Financial Crisis, the 2010 US Financial Crisis. With political repercussions. These are all adjustments of the socio-politico-economic systems that politicians have been trying to lord over around the world in the last two decades or so.

At the very least, the US economy is now undergoing some drastic adjustments - collapse of property prices and the US dollar as well as some banks commercial and investment. In this way, I believe that the US economy will manage its find its own feet after a few years and give the Chinese a good fighting in the global economy. Malaysia, in looking east and following Japan, is still caught in an asset bubble, and banks with a huge loan book to households, can only stay solvent so long as loan growth is high enough to cover up the subprime problem which must be festering. The problem with monetary policy is that you really cannot stage manage a "soft landing". You are flying at 30,000 feet and suddenly you let go of the fuel pedal; what happens. Brakes become irrelevant. Such events are studied as chaos theory or catastrophe theory. It starts with a smooth ride with a little change, and the next thing that hits is breaking point or if lucking a turning point.

With the present being an accident of the past, the Malaysian economy is now saddled with some fairly difficult problems. Now truly Malaysian, the purpose in life is to be very very rich, and for that you do not need an education. Education in fact can become a hindrance to material wealth for you really do have to go to garbage dump and shift through while the government keeps bringing in truckloads of banknotes to dump. The scavengers now employ bodyguards to mark out territories in the name of politics and justice, and the only fellows who work are those poorly paid to do the manual work. The end result of the activities must be handled to the masters of monopolies who compete among themselves to see who is the cleverest. What else get done in the economy? Houses, roads, cars.

The current government in Malaysia is in a most unenviable situation. The party is over, the cash is spent, now we are living on borrowed money. But everybody is well trained to be mercenary. Grab and run. How do you change this mindset.

In the macroeconomic front, there are a few variable to grapple with. While the ringgit will try not to fall with the US dollar - and hence heading from 3.00 to 2.70 and 2.50 - it is not that particularly strong either as can be seen from its Singapore dollar rate of 2.30 although this is an improvement from 2.40-45. A real show of strength for the ringgit is when it can go to 2.00, 1.80 and 1.50 to the Singapore dollar. I would be happy to see sterling at 4 ringgit from the current 5.

Of course, now the financial markets are in turmoil in Malaysia. Will there be an election rally. Will interest rates be raised to curb inflation. These are rumours used by currency speculators from offshore financial centres to shore up the currency and equity markets for a while. Buy on rumours, sell on news. All these will be over by May, June. The central bank can be concerned with the reserve requirement to reduce the credit multiplier from capital inflows, and banks will be incredibly silly to lend long term using short term funds as we had seen in 1997.

In the meantime, let us try to build our economic foundation of a solid education system, a court of justice, an economic system where those who work hard will get the fruit of their labour. Let us bring proper pricing back to the local system. Let us continue to teach our children that they have a bright future in Malaysia if they work very hard. This will be real change.

Malaysia In A New Paradigm

I have been unashamedly enjoying myself writing this blog in the last few months by taking a long detour through my childhood experiences, the transformations I went through while being educated and still being educated by the world in which I find myself in.

As you can see by now, Malaysia is my country and this is my way of fighting for it. Race is not a matter that I can choose, and I have to accept it as it is like all the things in life that I must accept if I am not to become witless. Religion is a personal thing between me and myself and how I come to terms with myself, with the community I am in, with the environment which I have unwittingly helped to destroy and the endless everlasting universe and cosmos that I can only hold in awe in all my little eternity.

I think we have all come away from the old foggy nationalism that arose way back when our fathers were trying to drive off the old colonial power - which was nothing but an institutional structure with the ability to impose a certain set of strictures or law and order as they call it in order to derive a certain end result. It was an order of establishing a global social economic network to drive resource-scarce but value-added rich industrial machinery first in Europe then Japan and now China (it seems). Those so-called imperialistic tentacles do stretched themselves far and wide and they are now collected called globalisation.

Malaysia is nothing but a little stretch of tropical land with fertile soil and some valuable deposits in the ground. The once idyllic community was disturbed when the economic machinery was brought in with people to man them in order to produce an economic output. That little act became a way of life for the people working here. In chasing the colonial investors out, Malaysia had effectively severed its economic ties with its major trading partners, and its economy took a major dent. In looking east, we tied our fate with Japan whose economic miracle pulled up Asia including Malaysia but only for a while before Japan failed under the weight of the American attempt to "rebalance" the exchange rate to correct its poor budgetary management. Asia worked hard to create the American obesity. Having seen the rise of Asia, or rather South East Asia and the city states, China realised that there was also a way out of their economic misery.

Malaysia's economic fortunes are closely tied to these global developments. As the global economy swings, the Malaysian economy must also adjust itself in order to make itself relevant to the latest new world order. We have rested out fortunes on the minerals that we can dig up, the produce of the land we can from planting and harvesting, and we have to some extent ventured into the assembly line business. The rest are just pure services connected with banking, communications, transport and logistics, education, commerce and a host of other services that ordinary people can provide.

In restructuring society, the first attempt was to bring the Malays into the modern economic mainstream which is the world of towns and cities and plantations and factories. It is urban pressurised living which goes according to the clock and not the heavens. There is a disconnect between man and nature, and there is very much a connection between man and man through agreements and contracts and other artificial constructs in order to solve urbanised connected living such as economic risks, healthcare and other urban ills.

But the modern economic mainstream thrives on openness, on communication and trade, the creation of markets, the synthesis of old ideas into new innovations, the stimulation of waves and waves of forward movement in order to keep up with the new developments around the world.

The Old Malaysia responded by imposing strictures, a corset to cater to the chosen few and ignoring the masses. The battle for a piece of the old cake was futile as the cake eventually crumbled out of dryness and lack of care in nurturing its growth. When the economy faltered, new money was injected by oil money while Japanese investments kept some urbanites in fairly well managed state of progressive misery. Once upon a time, firm control was held over the money supply to prevent any unwarranted exuberance, otherwise called speculation. Then suddenly, the new elite in the government took over the treasury. They burst into the stock and property markets. When things didn't go their way, they took over the central bank. They took over the judgment over criminal and commercial and political justice. They took over the monopoly of the economy. They created inflation and this fueled the state of dysfunction that the economy is now suffering, when fiscal stimulus means more jobs for unskilled foreign workers and the local graduates are left with nothing much to do except to contemplate revolution, and causing so-called political tsunamis.

The New Malaysia that we are now in is a honky dory world of escalating property prices and pushing the stock market through monopolies. Nobody has to work that hard. Money flows easy as banks send everybody cash to spend now and pay latter. In this new paradigm, the Old Politics looks decidedly anachronistic. Old Politicians look and sound decidedly dinosaurial.

The New Malaysia does not talk about religion, race or nation. The New Malaysia talks about building an effective and efficient economic structure and institutions that can create flexibility and dynamism in the New Economy. A robust New Economy. The New Malaysia wants New Leadership at all levels to be able to lead, to create New Frontiers for the nation and the world. The New Malaysia is not about Old Money but New Ideas. Forget about the 30% equity. Create New Wealth and you will get your percentage. The New Malaysia requires New Collaborations between all Malaysians, and between Malaysians and Foreigners. The Old Malaysia was about the Old Malaysian Elite collaborating with the Old Foreign Elite to make use of the poor locals to make their money. The New Malaysia must explore the potential in the local economic and social environment to create a New Malaysian Economic Force to fight the rest of the world, armed with electronics and brains. The New Malaysia does not kill and destroy other Malaysians.

In the new paradigm, Malaysia must guard itself against international human trafficking, international money laundering, international crime rings, international terrorism. The much expected beauty of the new world of globalisation has also ushered in a new world of globalised undesirables. The free and rapid movement of people, capital and goods means tighter security run by well-equipped and well-trained personnel. Who says there are no jobs for graduates. The only challenges is to kick out the Old Politicians in the civil service and replace them with fresh technocrats. There is nothing much to lose. The civil service has lost so much of its credibility and intellectual rigour that things cannot really get much worse.

Social Unrest, Networking & the Economy

Is social unrest a reflection of the rise of social networking on the internet, or is it a reflection of a more fundamental flaw in society that demands a paradigm change?

Social unrest is nothing more than just a bunch of people who gather in a particular geographical space and time to demonstrate for a common cause. The communication of the mind and intention could be transmitted by way of smoke, paper, buns, or electronic signals. The medium doesn't really matter. What matters is that there are a sufficient number of people who are willing to risk their lives to make their views heard. The risk is worth taking presumably because they have nothing else to lose. Why?

It is very hard to imagine that comfortable working men and women will not got to work but instead take to the street to give vent to their emotions, unless those emotions are very strong and overwhelming their senses. Such a condition arise in human beings, as well as other creatures, I believe, when they are hungry and angry.

The problem with the stomach is very real. For the lucky ones, the stomach needs to be fed three times a day. For the unlucky ones, refill once a day seems like a luxury. When the refill is not forthcoming, anxiety arises. And when there are enough number of people who share the same traumatic experience, they will act. There is nothing for them to lose: they will die soon if they choose to do nothing. They choose to act as an act of survival.

In traditional society, the distribution of food is by way of rationing. I have more and you have less, because I have political power - that power being obtained by how many men and women one can employ to do one's bidding (pursuing one's agenda) by the degree of access to food resources.

In modern times, this power to access food resources is obtained by way of money or wealth. This access is usually thought by good people to be obtained through hard work by means of diligence and wit. Unscrupulous people can obtain access to food and other resources by way of quantitative easing, among others - which is just an economic jargon for the central banks to give cash to governments in returning for a simple IOU called government bonds. That extra cash is then distributed in the form of contracts for jobs for public works - the bigger public projects are, the bigger the leakage to the elite. One sure sign of troubles for the finances of a nation and eventually the economy is the spate of new public projects which are usually undertaken on the pretext of national pride, rather than economic necessity or pure business opportunity. With more public projects, real estate prices increase and while the elite feels justified that their is an increase in asset prices and hence asset value, rentals get pushed up for pay higher returns to property speculators, and retail prices soar. As new public projects are laboured by poor under-represented foreign semi-skilled labourers, the home grown fresh graduates, the semi-skilled and unskilled become left out of the mainstream of economic development. The graduates take to the streets to talk of justice, and the uneducated take to the streets as gangs to loot.

Things can be made worse by natural disasters which suddenly and unexpectedly put a dent in the national budget. This the Chinese have long called the Mandate from Heaven.

The underlying economic disaster is served its final straw when a stone is thrown to cause a ripple across the waters.

False Dawn & Confidence Building

Money and finance people, who I will unceremoniously lump as stockbrokers, imagine that the stock market is a magic indicator and a reliable precursor as to what will become of the "underlying real" economy and conventionally wisdom says that the market leads the economy by six to nine months in the olden days.

This notion is interesting for study as pure logic or pure economics or simply pure human behaviour. This is also interesting as a study of human folly.

This is fundamental economics. IF THE ECONOMY IS DOING WELL, which means that firms are hiring because there is demand and they are likely to make good profits, then naturally the stocks of these firms will enjoy higher value as the expected return is higher. There is already a hive of activities on the ground as evidenced by the increasing traffic of people and goods and vehicles, and meetings and negotiations. When this is observed, punters will quickly surmise before the accountants have audited the books that business firms will report good profits, and they buy the stocks ahead of the results. In simple English, when people expect profits to be higher in the foreseeable future, they buy stocks which resulted in an increase in the price of stocks today. Expectations about the future have an impact on events now.

This is human folly. Punters and stockbrokers (and nowadays unfortunately including politicians, central bankers, commercial bankers, merchant or investment bankers) are keen to see a sustainable rise in stock prices, ostensibly to augur well the underlying real economy but more likely to profit themselves monetarily (and momentarily) for the purpose of raising funds for their own private projects collude to induce a "rally" in the stock market by talking and raising expectations. This exercise is now being legitimised as "policy" on the rationale of "building market confidence", thereby provided a path for all lies to be justified on the basis of it being good to the general public as it builds optimism. In recent years, during dull periods in the economy, several such "rallies" have been concocted and they have come and go as quickly as bubbles (a word applied to the market for good reasons), without causing as much a dent on the underlying real economy.

Extended folly. This folly is now extended even to the sacred realm of investment. Of course, this folly was started by Mr. and later Lord Keynes who thought it morally imperative that the government should "invest" even if "digging holes in the ground and filling them up again" just to create jobs when masses of people are unemployed. There is of course between a welfare state of giving free cash and food to hungry people and undertaking a policy where everybody pretend they are working when in fact they are being paid for pointless activities. Such pointless activities in modern times have evolved by cleverly to doing shoddy work by contractors who do bad jobs on overspecified government projects. While some would argue that at least something is built, but that something can be a white elephant or, in budgetary terms, a capital expenditure that can incur an unsustainable stream of heavy operating expenditure when instead a stream of profits should have been flowing. This folly has now gone to private investments. Although the "private" part of the investment may in fact still be government or quasi-government, especially after a period of a dull economy and government overspending has caused a dwindling of the small and medium size businesses and a corresponding rise of government-sponsored monopolies that systematically crowded out the private sector in a series of raids on privately profitable businesses ostensibly for social benefit but resulted in private individual privilege. The problem with private investments, especially when we are talking about the robustness of an economy, is that if you can count the private investments, then the private investments are likely to be lumpy, one-off and probably having more of an enclave character than pervasive effect on the economy. Do not be surprised if the general public does not understand those big private investment numbers in the way that the propaganda masters would like to convince their bosses how well things should be going on the ground.

At the personal level, the folly is common. Individuals, wanting to make it big in life, try to give the impression that they are already doing well by borrowing money to dress well, entertain well, drive well and live well. Many a time, the ruse doesn't work and these individuals often find themselves in debt, and thereby resorting to lying and cheating to "avoid trouble" and end up causing misery to everyone who is unfortunately to encounter such characters.

So, what is to be done properly in real life for the economy?

The government must be unobtrusive, in the sense that it is doing good work in keeping the government machinery humming but everybody just assume that that is the way the world works (when in fact it is just another piece of machinery that needs constant maintaining and upgrading). When the people take the government for granted, then they can begin to dream to kill their boredom by cooking up some activities which will engage them and the general public. Bankers are so bored that they welcome any new ideas to try to see whether they work. This dullness and boredom come when credit expansion is slow and there is no digression into collateral-creating expansion which is self-serving and mindless. Then, bankers and ideas people have the time to sit down and dry run the proposals to make sure that they are sensible at least on paper.

In the present world of smoke and mirrors, everybody is running madly around seeing their own reflections in hazy conditions, filled with fear and uncertainty but plenty of activity. They should realise the room is empty despite the smoke and mirrors and they should sit down quietly and do some real work.