Monday, March 25, 2013

Hobson's Choice: Vote

I intend to be philosophical here rather than ideological.

I mean, what choice do we really have when, to use a bad phrase, when we are stuck between a rock and a hard place (I could use a different analogy, but it would still be incorrect.)

If we really believe in the mud that one side hurls at the other side, I would think that both sides are equally just as bad. They are using language in public at each other which my mum would not allow to hear herself if I had to say them had I joined the "party." I think we are at the bottom of the pit, from all the mud at had been hurled. I won't be surprised if many of us have already switched off from the rhetoric.

I would imagine that this country is quite difficult to manage. After all, good is bad and bad is good. Anybody can think out of the box and get completely off tangent. When there is no reliance on logic and reasonable, we can simply be a bigot and still feel that we have the god-given right to utter absolute nonsense.

All of us what to start from scratch - by throwing the baby out with the bath water. We have thrown away what we had since the colonial times, and start from a new slate (I won't say clean). Now, someone proposes to come in and start with another clean slate. This is rootless revolution. I do not imagine anyone of us to be so wise as to able to reside in every "now-ness" with "nothing-ness."

Both sides subscribe to the same model; the only difference apparently is method or approach or modus operandi. This gives me the reservation. I would rather that both sides declare that they shall not engage in nepotism and if they are sons of ministers or elected representatives, they should involuntary step down and let others who do have such privileged backgrounds to stand up and give their contributions. (I shall not go further, as there are ingenious ways their fathers had argued why their sperms are better than my father's.)

I do agree with the view that says that probably the best option is the third option - the independent candidates - although they may not be of sufficient numbers to form the next government, but then we says it should always be about forming the next government. I like the argument that the job of the opposition (as a profession) is to be, as Socrates argued in his last days, according to Plato, is to be a horse fly which so irritates the horse that it keeps the horse awake. (But, of course, we know what happened to Socrates.) If we have to die, this is not a bad way to go off.

Really, the current fight is a fight for power, an intense fight for absolute power. If that is the final outcome, then we are all dead. The best compromise in a Hobsonian dilemma is to reduce both sides to their absolute margins that one is in no position to allow the other to be a dictator or, a tyrant. We had one too many in our recent history.

Neither side, from what I have gathered so far, really cares about this sovereignty of our nation, an abstract entity which we should cherish because it is so endearing as a concept - that we have this dear country of ours to die for. Most of us do that even without having to go to the front-line. We die in poverty, if not physically then spiritually. I suppose the best thing to do then is to rely on no-one, and sometimes not even ourselves. How sad, but probably how true!

Wednesday, March 20, 2013

UK Economics vs US Economics

When I was working in the stockbroking industry a long long time ago, I could not help but be blown by the sharp contrast between a UK fund manager and an American fund manager.

When I started out, we were doing with good old British traditional macroeconomics. We asked questions like: Where does the GDP growth come from in real terms? Is it investment driven (quantity) or is it really from productivity growth? Are you sure that it is not money sloshing around playing havoc on values that we are mistaking nominal value for real value? Is the money supply growth too much? Is the money supply growth coming from the system itself such as by an increase in the speed of lending, and that it is not coming from central bank - worse still, the central bank buying the debts of banks!? The central bank was even furiously trying to stabilise the money supply by buying foreign money inflow - in a process called sterilisation. I think this phrase has not been used since. Are there product innovations and is the market strong? etc.

At some point, we felt that the economy was really doing well beyond its capacity to absorb the amount of cash that everyone was throwing into the stock market. So, we got our clients to bail out. British clients. What saved the stock market for the day were the new American clients.They were very fresh. They just had one simple rule of thumb to go by - the real interest rate. If the real interest is positive - if the nominal interest rate is higher than the inflation rate - then the situation is considered not inflationary. There was then much game being played with the concept of the core inflation rate - you'd got to take out the "insignificant" elements like food prices because they did not impact the production of goods and services, etc. Much capital was made out of these little mental games, so long as there was money pouring into the market. Of course, until some smart person shouted "Fire!" and everyone rushed to exit through that one small door and, of course, the devil was there waiting to shut the door. The devil was playing with fire; "if I get burnt, so should you too!"

So, it amazes me how on earth can the world live with the idea that it is okay to the real interest rate is now negative as the nominal interest rate is near zero (for the saver) and inflation is far higher than that thanks to China. Of course, there will always be the market operators who will happily tell you all kinds of stories everyday just to make you feel looked after because you have all this money and are bored. I worked with this colleague who was a senior (one of the bosses) and a dealer. I heard him said to his client: "The stock looks good. There is inflation everywhere and prices are going up and this will be very good for the P/E. Buy." I didn't think he was even an economist.

So, to all of you out there trying to earn a living selling stocks, or out of a job and punting stocks just to feed your family, I wish you all the best. You are doing what I have given up. You are brave. This blog not just this post, in fact, is just a little help I am trying to give to people like you who are caught in the deep end of things. This is a side view which I have the luxury to paddle, to alert you to other things which you may have overlooked in your haste. I think the limits to foolish is define by the extent of one's greed.

Monday, March 18, 2013

Jeremy Grantham

I was quietly channel surfing the TV late last Saturday night when I chanced upon Charlie Rose's interview of a man who spoke with such firm resolution that I stopped by and listened for a while and as I listened I almost thought I was listening to myself talking about the state of the US and the world and the nonsense that is going on in policy and probably the only chance you've got to anyone indicting Greenspan for his incompetence and how Bernanke is being misguided. To me, it is indeed refreshing, to know that I have not been alone in these thoughts and that somehow we, as a world, is probably is in a far greater than we would all wish to acknowledge. I admire this gentleman for sticking to his job and slugging it out whilst I have resigned myself to the backwaters. Perchance that some of you might wonder what is my worldview, at least in regards to economics, I urge you to google the name of this gentleman and get acquainted with what he has been saying and is still saying in respect to the current developments in the global markets. I have reduced my focus to a very small area and is now very happy doing the very little that I have to do with this world. I do not think that he is a pessimist and I think he, like me, is only looking for the next turning point. I wish you well if you think that money and wealth can be got by the flickers of the computer - or smart phone.

Tuesday, March 5, 2013

The Sovereignty of State

As our two previous posts were pointing, and given the development of recent events (here), it is timely to discuss the issue of the sovereignty of the State.

Race-based discussions of politics are usually focused on the rights of a particularly community of people identified with difficulty along some critieria (clearly or otherwise) to absolute authority over the resources (often including its inhabitants) of a certain geographical area. This has been the basis of the long underlying fight among human beings (homo sapiens) for survival as well as the establishment of superiority over everyone else including other creatures and the natural environment. It is therefore not uncommon for different tribes of homo sapiens to rev themselves up to overcome their innate fears and gather sufficient courage every time they want to undertake a massive effort, often to overcome a perceived or real threat to their tribal existence. Much of the basis for the existence of traditional tribal societies is land-based, and land is a common rallying cry, especially when history, recent or ancient, is cited as the justification for a major tribal action.All these things boil down to human survival and hence economics.

The disruptive nature of the struggle for power in politics is the consequence of economic destruction that must accompany the struggle as there is nothing to cause discourage and dismay to the tribes you want to conquer than to lay to waste their years and even generations of hard work collectively and individually. (It is interesting to observe the type of heroes each society puts up as role models for the young generations - whether political or economic, that you get a sense of the essential character of the people in a community.) The politicians really do not mind the economic destruction because with diminished resources they could control those resources, at least in the immediate terms, and decide who is to live and who is to die. (Note that famine and hunger around the world is not due to the lack of harvest, as the world is overproducing, but most likely due to them being among the marginalised communities who they are being left to be obliterated.) The uncivilised version of politics is to disregard the lives of the inhabitants of the area in question. As one famous guy had said: Power issues from the barrel of a gun.

The modern civilised version of politics is to respect the rights of all human beings (and some would say the creatures and the natural environment) in the said geographical area so that everyone has a chance to survive and live - which in short is termed as "the State." The State is therefore not one dictator or a superior being who through whatever justification - divine or historical - that can be put forward to instil fear and respect in the hearts of ordinary people; but the collective power of the people of the whole community. This modern and enlightened view of the rights of a community of people is the result of literacy (the ability to read and write) and education (the ability to think and understand) among the general population in abstract concepts which thereto have merely being the domain of religion. Abstract ideas, and hence creativity, is not confined to the sacred (that which cannot be touched or questioned) but to basic economic questions concerning food and drink and the propagation of future generations of human beings (homo sapiens) lest they not being overtaken by monkeys (Planet of the Apes) or other lower creatures (Doughnut of Worms).

To any self-proclaimed offshore sultan or even nationally elected political party or political coalition, we say that the sovereignty of the State ultimately lies in the hands of the ordinary people - everyone of us - and this power is exercised once every five years in this country. Political parties are huge machinery that churns constantly to (confuse the people and to) convince people that they are the right party to govern the State - this being the game that is generally accepted in town for the practice of this abstract concept called democracy. What we get - terms of the politicians who are marketing themselves - is generally a reflection of the level of sophistication of our society. Malaysia seems to be on the verge of a breakout from the old-style dogmatic angry-old man politics into a transformed new-world socially-conscious young-people politics which wants to see justice and fairness for all. It is bad politics to think that seemingly disadvantaged people would want to see that injustice being inflicted on others as well, unless one is terribly vengeful. I think young people everywhere wants to be left alone to do their own things and create their own worlds, rather than have authorities telling them what they can or cannot do - of course, I would add, within the bounds of reasonableness which we can all determine in due course once we have a chance to debate the issues to our hearts content.

So, we should shoo the self-proclaimed offshore sultan off - as we the people on these lands also want liberation and independence from these wannabe sultans (there are several contenders). We would also want our liberation and independence from any political monopoly that we have - and this can be shown by the choice of an alternative, if any and if better. As our nation is on an inflection point politically (we seem to be on an inflection point for some time), we still unfortunately have remnants of the old and dictatorial as well as the trembling new and unsure. We should have a brand new force that is prepared to sacrifice itself to create a new and better Malaysia - rather than imitate the existing old party politics which seek to perpetuate its franchise as long as it can.

The old conspiracy of preserving the longevity of a political party by way of the intruding into the corporate world in order to secure its war chest as well as the way to prosperity for the political leaders should not be taken up as the model for politics in our country. To do so is to be the same as the enemy, and hence old wine in new skin bags. The entanglement between politics and business can be seen in the entanglement between the job of the prime minister and the job of the finance minister - a combination cooked up during the worst of times for this country and seems now to be seem as a normal practice which it should not be. The mixture has been badly argued as part of the national policy to redistribute wealth of whatever now is left and this has produced a loss of dynamics of the private sector who are not sure whether the fruits of their labour will somehow be nationalised or not somewhere down the line. It is far better to spare some efforts to straighten the rails first rather than pushing the broken train back on track all the time. We should spend some time to fix the rules of the game so that everyone or every community has a fair chance to accumulate assets to demonstrate their wealth - if that be the measure of human social progress. I know some people see this world as ephemeral and wish to leave nothing before. I am sorry for these people who kept being scolded by their leaders for being not greedy enough.

Monday, March 4, 2013

The Generosity of Locals

In high-income economies, the locals are generous in welcoming immigrants because they feel they have a lot to share as well as the immigrants will bring in new opportunities to trade things and ideas.

In very traditional communities, especially ones that have established themselves for centuries, they must have, after all those years, found their own perfect little worlds in their own perfect micro equilibrium economically and socially. If surrounding resources are plentiful and they are all willing to work hard, their communities will have grown. If not, their communities will be modest but nonetheless thriving.

By being willing to accept perfect strangers and new ideas, the locals must be in want of a new world which they must have imagined would be better. Certainly, there would be a core of elite who would be in control of the local resources and situation traditionally. Locals who accept new ideas must be those who are in want of establishing their own little niches in their respective local communities. From a stable and probably stagnant situation, a new and more dynamic situation will be created with the new influx and hence an unstable (not necessarily destablishing) situation. It is this disequilibrium which creates the new forces for change, as the immigrants and the hungry locals work together to do this that no one has ever done before.

Who is a local and who is a foreigner is a story that can only be told properly after a long evolution as time will somehow reduce the major differences and reduce everyone to the same basic features. In the immediate term, there is plenty of scope for discrimination and the ones who are likely to suffer are those who probably have very little power to fight that discrimination - the young and old offsprings of inter-racial marriages. These sufferers are a product of the locals and the immigrants and it is a shame that everybody has to suffer as a consequent of narrow mindedness. These are the silent minorities whom the extreme left and extreme right of the spectrum of colours will equally condemn as the non-pure. It is quite interesting to realise that, once discrimination rears its ugly head, it is unlikely that the capacity to discriminate will be discrete - it is likely to be part of the discriminator's indiscriminate self.

Hitler's discrimination against the migrants was that they were rich in the eyes of the local poor because of the mismanagement of the local economy (as a result of war) and claiming that the superior locals must regain their rightful place in their own fatherland, he set about obliterating the rich migrants. His discrimination policy suffered the usual problems of trying to make discrimination - it is easily to identify total immigrants, but what do you do with children whom one of their parents is a local as well as immigrants who have previously  being recognised by the state for gallant service to that state. When his schemes eventually failed, as he became convinced himself to have all the solutions to all the problems, he started blaming his inner circle whom he used to trust. His final madness was when he felt so despondent with his own people that he felt that they should all be put to death because he considered them to be useless (presumably to his madness).

A nation of everybody must be a nation of people with generosity in their hearts to accept people and their ways which are not similar to their own. Malaysia has prospered because of the generosity of the Malay people (and the orang asli) as well as the generosity of the natives of Sabah and Sarawak. Their willingness to accept foreigners and make them welcome and feel at home is a major asset of theirs whom Chinese and Indians and others could well learn for their own good. Of course, because of the great differences in background and circumstances, their different worldviews produce different economic results. The most logical conclusion must be the infusion of the positive elements of all cultures that will bring out the best of the communities that have now decided to live together in perfect harmony. It is perfectly natural as well to set about identify one's own strengths, but it must immediately be accompanied by the identification of the strengths of others as well and learn from them that the world will become a better place than the circumstance we find ourselves in.

If we look at ourselves in the perspective of the long history of the world, we are nothing but the present generation, each of us regardless of our background and profile. I think each generation should make its own decision of the life they wish to live and they should live a life that is different from the parents'. In this respect, the constant change of leaders as their generational days in the sun is over is good and necessary. The old leaders, especially those who have failed in imposing their mad ideas on us before, should gracefully retire from public life (i.e., absent from the media) and let the young leaders brew their new concoctions of ideas, however wrong they may be (and who knows). We have repeatedly seen this in history and the world today is no worse than the world yesterday (whatever people may complain).

The unfairness of discrimination is that as generations change and as each newer generation becomes more similar to each other especially within a community, the lack of social and economic and political mobility merely creates a problem for the future when a outlet is necessary to release the tension of discrimination. Malaysia has started on a good footing but when on to a wrong second foot. Hopefully, the third foot will be placed plainly and squarely on the same soil when we all in Malaysia eat and excrete.