Tuesday, December 20, 2016


A man shot dead the Russian Ambassador to Turkey today in Ankara.

There have been many killings around the world everyday, in big cities and small towns, among friends and among families, between people who do not see eye to eye with each other and do not want to, between people who have a misunderstanding because they have different upbringing and experiences.

But this particular killing is the result of anger over political actions in Syria by local and foreign forces which has resulted in the ruins of towns and homes, and the death of many people with those alive fleeing for their lives.

Will this one killing of an official avenge for all those killings of many ordinary people, and the matter ends? Will it stop further killings? Or will a proud nation demonstrate to the world its superiority and take matters to a level that prompts other equally proud nations to a show of force?

We can only tremble at the prospects.

Tuesday, December 13, 2016


Is lying the result of dishonesty or incompetence?

Most of us assume that someone told lies because they are saying something that is different from the truth.

But what is truth?

Surely when we know what has transpired, we know what the truth is. "I stole the money and I try to hide the tracks to the money I have stolen."

But things can get a bit more complex. "I want the money but I do not want to know how that money comes about and how does it come to my access. All I want to know is how much is that money and how can I have access to it." One can pretend not to know the whole process. One can pretend to be stupid. One can pretend that one prayed and the money appeared.

Of course, all this pretending and not wanting to know exactly how the whole thing is done has been captured in that image of the ostrich sticking its head in the sand. But then someone has to tell the ostrich that its arse is sticking out.

One has to be really clever to be dishonest, as we also have an excellent example in our midst. That cleverness stems from playing the legal game. "Well, where is the evidence?" The trick in hiding evidence is to lay the whole theft in very public display, such as in the form of a public policy. "My purpose in this policy is to take money away from the rich and give it to my friends who are looking after me." This can be couched in very general terms. There is nothing to give the stolen wealth to friends because they are not given to the thief directly and the friends fall within the categories as defined by policy. Very clever.

The only person who can blunder in lying as in stealing is to be less than vigilant, by being incompetent. It is tough enough to cover all the tracks and pretend not to know; worse, is not wanting to know completely and then doesn't know anything at all. You have not way to control the whole situation. Your backside is wide open.


It is foolhardy to expect politicians to be honest.Politicians lie from the moment they decided to be politicians.

They tell themselves and their supporters: I want to be a politician to help the people.

There is nothing wrong with that as an intention. But what is very wrong with it as a statement of truth is that they do not have a clue as to how to help the people. They may know how to help themselves and how to help their friends, but they do not know how to help all the people in society.

They may know how to argue, how to disagree, how to protest, how to create a challenge. But can do many things that are negative. But they do not know how to do anything positive, by building on what is already good and creating a greater society.

That's why never, never, never ever believe in any one politician. Politics is never about the politicians. Politics is a process and it is always about the political process.

In democracy, the political process is always about changing the politicians and the democracy is in the choice by vote of the politicians. Democracy is not about one political master choosing the next political leader for us; that's political dynasty.


So now we have each group championing one cause and then appearing all over the place.

We have one championing "clean election" which becomes embroiled in calling for the resignation of the prime minister. I thought they are fighting for clean elections which are a very specific and very difficult thing to do. Do we clean up elections through crowding out in the streets, no matter how peacefully? Isn't there a "cleaner" way of doing the job more effectively?


I am wary of people playing with emotions through social media. Things can end really end up very messy.


I am calling for competence.

Thursday, December 8, 2016


Alas, we cannot ignore the rampant spread of hypocrisy in our society where there are double and triple standards and everybody is lying through their teeth just so that they can outshout each other and shutting everybody up; they having the final say and the monopoly of the public voice.

The corruption of the nation starts with the corruption of the integrity of our national institutions by the elimination of their independent powers and condensing all powers of the nation in the hands of one man, both political and economic. This was done long ago but in our lifetime. What we see now is the secondary effects of that degeneration, where corruption is taken to be normal and only something much worse than corruption may be abhorred, maybe the loss of life?

Our nation has turned into a circus where everything is played for the media to display. There are no more men and women who are satisfied in speaking quietly ready to compromise. There is one-upmanship everywhere. The s--t has risen to the top and they all seem to be very proud of themselves.

What is now there for the nation?

Are we going to spend our time glued to the media for the information and no truth? Or do we turn inward to ourselves, contemplate and ignore reality?

It is clear that there is a political battle going on on a full scale in clear sight of everyone. The one who is very old feels that he has one last bit to do before he dies, so that he can have the last say and leave us with his s--t. There is one who is embattled by a series of bad judgements and bad advisers and who have really made a very bad situation much worse. We have olf soldiers of the last regime who feel that they must defend their old legacy and pile all the blames on the current one. There are the old opponents (not enemies) who have been play the devil's advocate for so long as the counter-party to the old regime and one should really not be surprised when the two sides synthesies to make the old as one (they are the same). There are the minorities who have been so marginalised from the mainstream that they have an existence of their own, and the use of the GST to weed them out is the last straw for the economy which will now see the bottom falling off. The new monopolies that have been created to become the pillars for the new economic policies have become so inefficient that they only way for them to pay divendends to the government is to raise the fees the general public must pay for the services they have monopolised. And these fat GLCs think they are clever.

Money corruption, although not honourable, is a product of an inefficient and cumbersome government machinery. But money corruption on a grand scale across the board is bad in many ways, first, in ruining hard work and productivity gains, and second, in ruining the currency as these corrupt money must somehow be stashed away overseas to avoid being caught and to protect themselves against a currency which by their very act have helped to weaken so systemically.

I do not admire the old guard who came out to warn about the weakness of the ringgit. Well, he should know what he was talking about because he had done it before. And the central bank is still dishing out the same old intervention measures. What's new?!

Monday, November 21, 2016

Neo-Liberalism & Post-Truth

It is now getting a bit confusion over the proper meaning of liberalism. In ordinary English, liberalism simply means being easy and without any hang-ups and that you allow others to do what they wish, while you carry on happily along with your own insignificant little life. Liberalism means absolute tolerance of yourself and of others, the fundamental tenet being probably that life is too short for each of us to hamper each other.

Now, if you were to mix the notion of liberalism with that amorphous idea of democracy, you would probably get the idea that you could do whatever you like to disrupt the current system of things because you feel that there is an injustice and a wrong somewhere and that you are the person to contribute to that correction, simply because you have the liberty and the instrument to do it.

So the liberal democrats in their yellow T-shirts congregated in the city centre to demonstrate their disgust with the current regime because the current regime has done something that is wrong morally and they wish the government of the day will simply just step down. The pro-regime red T-shirts exercising what they saw to be their equally justifiable right to counter-demonstrate in support of the government of the day.

We have also elsewhere losers in a presidential election stepping up into the streets and the limelight to shout into the faces of the winners that they did not agree with their values and what they had said during the very hot campaign and what the winners to step down so that the losers can take over because of their more liberal stance, all in the name of democracy.

What puzzles me is that what is the point of having a debate if we are all supposed to subscribe to the same views in the first place. I thought the diversity of ideas as a result of the challenging of the norm and the opportunity to speak the seemingly ridiculous has been the way forward of our current civilisation, a process which has carried us out of the dark ages and into the light of logic, deduction, experiments and all that comes under the term of creativity and innovation. Of course, we also learn from history that some of the greatest disruptors of obsolete conventions had to die for their realisations. So, the truth can be ugly and at times bloody.

However, maybe it is precisely because of the shortness of our time in this life and our ignorance of reality that we guard so vehemently our own little world with our own little truths or falsehoods whichever that give us our mental and material comfort that we are so ready to kill those who dare to destroy our sense of being.

In trying to protect our own vulnerable sense of our own little truths, we are therefore inclined to be swayed and we also work so hard to try to sway those of like-minds with emotive words that touch our hearts but which contain no substantive truth that emotional rant seems to be the instrument of the present and the future to create a world that only we and our like-minds are happy to inhabit. We are now in the world of post-truth, the new word in the Oxford Dictionary for now.

It is no more sufficient for anyone of us to speak our truth softly and gently. We are now required to shout and be heard above the crowds, the lonely crowds who live their atomic lives through the electronic handphones while ignoring those standing next to them. Post-Reality?

Thursday, November 17, 2016

EU Ideology

The European Union is an idea based on an ideology, not on some fundamental inalienable truth of nature that cannot be broken. As an ideology, it is a belief not a fact.

The EU argument is that you cannot have free movement of goods without free movement of people. Economic theory has nothing to prove this imperative. The idea of the free movement of goods among countries is that you do not have to have free movement of people in order to have full employment among trading nations. You can have investments in your own countries and then trade.

The free movement of people is another thing altogether. People had always been free to move around the world since time immemorial until the idea of nations cropped up which was as recent as the breakup of the British Empire in the last fifty years or so. What makes the current free movement of people so unmanageable is the age of information and mass travel so that instead of a trickling effect we get an avalanche which puts pressures on local councils to provide the necessary services.

(Malaysia has chosen to ignore the problems of immigration because they consider them to be foreign workers here for a temporary period only, when in fact they are all here for one whole generation with families and children.)

The mounting social pressures put an enormous strain on the government of the day especially when the economy is weak and unemployment is rising among the locals.

The free movement of people is a political ideal aimed at the creation of a unified broader federation of nations, as a political bloc so to speak. It has less force from an economic point of view. The central issue may simply be record-keeping of the movement of people. The solution may simply be administrative.

There is currently great vehemence against Brexit in the EU because there is real danger that the EU experiment may fail. Nations with successful cities are under tremendous social pressures. With the rise of unemployment, nations with good welfare systems may have to discriminate against newcomers so that the systems do not break down. There will be budgetary pressures and this is when the free movement of people becomes a real economic issue.

Thursday, November 10, 2016

Trump Triumphs!

It would be wrong to say that not many imagined Trump would win the presidential elections. The results say that many did indeed thought so and voted for him!

It is only those who did not like him who could not imagine how he could be president. It is such self-delusion about one's own truth.

Then, of course, there were those who did think very early in the campaign that he could win - because he was saying all the right things, in their ears, about what is really wrong with their nation.

Of course, Trump can be faulted for being politically incorrect - but then, political correctness does seem to have a certain fashion trend about what is being correct. After all, correctness is a subjective value - and most often in the public space and mostly unlikely in one's own intimate privacy.

Trump's victory is at the same level of the new reality as Brexit. Both completely shakes the mindset of the mass media where everything is presumed to be business as usual.

But we are living in an unusual time, in a time of great turmoil and great strife by masses of people for mere survival, wars that are destroying entire cities and towns, and ordinary people are being crushed to their deaths or drowned as they try to run for the higher ground.

We are living in the aftermath of, as well as the continued money printing of quantitative easing, when trillions are sloshing around the global capital cities looking for real estate or that glittering metal called gold. Banks are waiting for implosion as they sit on over-inflated collaterals. In the meantime, subsidies are removed, austerity drive made, governments snatching purchasing power from the ordinary people, good jobs hard to find, wages unchanged at low rates, badly paid foreign workers being exploited by owners of capital in menial jobs in construction and restaurants.

So, the people look for a leader to change the status quo which benefits only the elite and they are elite because they have managed to borrow huge sums from banks at low costs to buy real estates which have been inflating out of all proportions in relation to the value they can benefit human welfare.

Trump promises the people that he will look after them, give them decent jobs, make their lives more meaningful again, help them cope with their daily lives, feed their families, and solves their own mundane little problems at home in their own background instead of trying to be a hero to the big big world.

The US domination of global politics came out of WWI and WWII with the rise of the defence industry made possible by the seigniorage that can be enjoyed out of the US dollar becoming the reserve currency and the unplugging of the US dollar from gold in 1973. The US has become fat by the printing of money which has also in the last thirty years brought up the rise of China and India.

Brexit is a real cry for change by the UK and for loosening of the tie with continental Europe. The EU was a product of WWII and libertarian politics which imagined itself as another US. But the EU is a group of old nations which the old educated elites of former colonies are conditioned to love with nostalgia. But ancient civilisations are waking up after long periods of hibernation to become the ultra-new nations. It is this new reality that the UK and the US are waking up as well.

In part, Trump is a necessary evil. He may not be the best president of the US, but he is also a game-changer which means that you should not expect things to be the same as before.

While the media is screaming uncertainty, what they should be looking forward to is new ways of thinking and new ways of doing things. The world is throwing away old ideas and embracing earth-shaking new ways forward.

Thursday, August 25, 2016


Our sense of identity is what keeps all of us sane in this world of constant change. This sense of identity is the constant that is inside us which tells us who we are and how we can relate to each other.

Knowing oneself is the ultimate in self-development. Each of us tries to find out who we really are, what makes us at one with ourselves and at peace with ourselves.

This is important after all the indoctrination which we are all being subjected to since we were born. We are all taught from young the necessary skills of how to survive our immediate environment and the environment we may meet. The farmers tell their children how to farm their own plot of land, the fishermen how to fish in the coast just off their villages, the shopkeepers how to charge a few cents above costs, the coffee shopkeepers how to make coffee and soft boiled eggs, and so on. School masters teach their pupils how to read and write and count in order to be able to communicate with the rest of the world through books and how to deal with three-dimensional materials in a meticulous fashion.

Each creates a sense of identity that is immediate and local, familial and communal and parochial. There is nothing wrong with this. First you know who your parents are, then your relationships and friends and other people you come in daily contact with. Each does at a different job to complement those of others. Each tries to resolve a different problem facing the community in which they live, in order that everybody shall live happily with the least of the inconveniences of the mundane.

The competition for survival, which is the hallmark of modern life, calls for effort by each and everyone to increase each of our own capacities to produce and provide in order that more can be consumed by those who are less fortunate. The increase in efforts is required of all; if only one person makes the effort, he can only give but not receive in kind. But the reality is that everyone is gifted differently and what often happens in small local communities is that those who have will help out those who are unable to help themselves.

The sense of identity can of course be generalised in order to embrace more and more universal and even cosmic concepts. The king of a community calls for a sense of the identity of the state, and the king of a country calls for the sense of identity of the nation, and the president of a federation calls for a sense of the identity of the federation of different entities each of which may have little commonality with other of the composite. The head of an organisation calls for a sense of identity of a cosmic union with a principle or a principal, appealing to very ordinary and sometimes ignorant but simple people who merely wanted a sense of identity belonging to a family of sorts. The whole idea is that everybody in the group is the same in one or some ways, but not entirely.

When a sub-group within a group defines itself different and deserving of special privileges, then this is a demand for entitlement which the rest of the grouping must pay. This sets a lope-sided group which can only grow in a deformed manner and not rounded. The day when the special sub-group sees itself to be at one with the rest of the group will that group be set on the path to advancement.

It is inevitable that the history of society can be properly seen in generational terms. Each generation makes its own mark in society. Unfortunately for us, ours is marked by an insecure person who wants to reshape the world to please himself. But god will one day save us from him and we once again be free to be ourselves. We may be too old by then, but hopefully the children we are bringing up with close the wound for the whole nation.

Monday, June 27, 2016

Brexit: What Now

The battle was neck to neck with a difference of a million votes which means the country is split right down the middle: for every one voted Leave, there is one voted Remain, well, almost.

The Brexit referendum on 23 June therefore has been most divisive and there is a need for the nation to heal. But this is going to take some work because even the two major political parties are split. The Cameron/Osbourne camp is not happy with the Johnson/Gove camp. The Corbyn camp is not happy with the Hilary Benn camp.

This political mess is the source of the uncertainty over the consequences of the vote to leave the EU. The uncertainty is that no one at the moment is deciding how the UK should leave the EU. The people are uncertain. The businesses are uncertain. The European Parliament is uncertain.

In this uncertainty, the first instinct of the financial markets is to sell. There is no point holding to your portfolio and waiting for the uncertainty to be resolved. It is better to get out and wait. If you want to get out, it is better to be the first the get out than to the last to do so. This is why the financial markets are selling down.

Is Brexit bad for the UK economy?

In the first place, the world economy including the European economy is already in bad shape before the referendum as a result of the consolidation that is taking place in China which some have forecast that it would take five to ten years for the consolidation to be completed and a recovery engineering with a new framework for domestic-oriented growth in China. US is on the verge of a recovery and the Fed has been trying to raise US interest rates and end the quantitative easing which has so far been creating perverse flows in the global economy.

The major perversion of financial flows in the global economy has been the putting of financial resources in the hands of extremists who now have access to heavy weapons. It is this war that is creating the flood of refugees who are fleeing for their lives and in search of greener pastures that is disrupting the peaceful and happy life of the Europeans. The refugees want to enjoy the lifestyle of the English, French and Germans.

Presumably what Brexit will do first is to put a stop to this uncontrolled immigration into the UK, and in its place will be a process of processing and approval. Other thing else will adjust.

Whether Brexit means a complete withdrawal of the UK from the common market is another point to be argued. Nobody wants to do less trade; it will be silly for the EU if it wants to be punitive in the hope of discouraging other EU components to leave.

No doubt there will be investments which would have come into the UK before Brexit and which may want to rethink, mainly because of the uncertainty surrounding the terms of the departure rather than the unhealthiness of the UK economy which probably is no worse than other European economies. Investments that are already in the UK should have no further push to get out.

Certainly, there are many serious to be discuss between the UK and the EU parliament. It will be a long process of at least five years to sought out all the details, although the main details can be framed within two years. This is when political cohesion in the UK politics is crucial.

I expect the financial markets to recover soon after all the sellers who wanted to sell have sold their position. Then they will start looking at the bright side. By then, 18 months ?, Brexit may be a happy word on the lips of ordinary people.

Sunday, June 5, 2016

Muhammad Ali

What has a boxer got to do with economics?

Muhammad Ali just died aged 74. He won the heavyweight championship for boxing for three times. He made a lot of money for the boxing industry and the world media. He gave the world enjoyment of his skills and talents, although he and his fellow craftmen and women have had to suffer for their art.

He called himself the greatest. He knew his game and he predicted the outcome. Wouldn't he be entitled to say what he knew without being labeled as boastful. He got to where he was by being himself and on top of that lots of hard work and coaching from his teachers, and be willing to listen to them. He had humbled himself to be taught.

But to the rest of the world, he only wanted us to know that we were not like him. He stood at the apex of his sport, and he bashed everybody down. He had something to show the world what made him different from the rest. It would be incredible that armchair critics knew exactly how he thought in order to be who he had proven himself to be. The only thing that armchair critics could say must be some innocuous remarks which reflected their limited view of life as a non-greatest.

The greatest practitioner of his art is a person who is driven by an inner demon to perfect his art in spite of his own personal imperfection. He sees imperfection in himself, in others and in the world around him. He pushes himself on his lonely journey on the stony road of labour and hope to the summit which no one has any idea what that may be. He stops when his energies fail him and where he has stopped people applaud him for what he has achieved even if that may be the highest point in the world. He has got to the realm of existence where others have no been to before.

To be the greatest is the greatest that anyone can imagine for himself. He has the right to declare that to himself and to the world. The only danger for him is not that he will not push himself further but others will be jealous and will want to stop him from continuing to proclaim himself. The many forms of empowerment that people exert today are nothing but self-proclaimations, and many are high ideals. But to be able to physically demonstrate and establish that superiority of one's own physical and mental prowess and exert it cannot be a wrong or a boast. It is a truth spoken ahead of occurrence.

Muhammad Ali was the greatest, and probably is.

Sunday, May 15, 2016

Brexit: Frame of Argument

I am interested in this topic, so why not - I'll make some comments.

Each side is making their arguments within their own frames and those frames do not intersect.

1. The Leave group is arguing for the preservation of soverignty of the UK which they do not want to be superceded by the EU. They are not arguing that they will have nothing to do with the EU. They can still engage as closely as they can with the EU as they can with other sovereign nations. It does not mean that they do not welcome immigration, but they want immigration to be controlled by the UK authorities not the EU. They welcome EU investments and they can create incentives for them in the UK's own terms, not as the EU dictates. They want to have their own fiscal and monetary policies which are tailored to the needs of the UK economy, not the EU policies which may be good for the EU as a whole but may not be good for every nations in the EU.

2. The In group is arguing that the UK has been doing well because of the size of the common market in the EU, not just for agriculture but for everything - although in fact the UK agriculture is not quite dead as it cannot compete with the imports from the EU. The argument is that if the UK were to leave the EU, it is likely that the UK will enter into a recession, presumably because the EU will then not welcome UK imports - not because the UK will not want to export or be able to compete with the EU. There is an implied threat from the EU. There may be a reduction in the amount of investments because there will be greater scrutiny of investment proposals. The argument seems also to be that by leaving the EU, the UK will not be welcoming immigrants from the EU and therefore the economy will slow down because it will not have enough workers and that wages will go up and investments will be dampened. It is conceivable that there will be fewer immigrants with UK leaving than UK staying in the EU, but it may mean fewer unskilled workers for menial jobs in restaurants and other services in major UK cities. It may also mean lesser pressures on public services and public housing, etc. The reducation may lead to an improvement of the quality of life of the people in the UK, although they may now have to learn to do their own plumbing, minor repair works, etc.

The reality is that maybe the UK is already on the verge of entering recession just like every other advanced economies in the West as China slows down. Of course, it does not help if the Leave option creates greater market uncertainty as hence a reduction in business investments. The Tata Steel there is in trouble for example and will retrench workers if revived by another party. Things may not be rosy in the coming months. They are not likely to be caused by leaving the EU, although leaving may make a bad situation worse.

Indeed, the Govenor of the Bank of England has overstepped his role by adding the voices of the opposition to leaving. The job of the central bank is to stabilise the financial system whatever the economy. Mark Carney argued that he is only doing his job - the way he sees his job to be, which is to provide comments to the market on what the central bank sees to be the short-term conditions of the economy - which usually provides clues to the market how the central bank will react and hence the market will take pre-amptive actions to counter-act the expected actions of the central bank. But in this case, the governor merely provides an opinion of a possibility and has not offered any clue as to how the central bank will react. The implied scenario from the government is that money will flow out, as investments withdraw, not as less investments will flow in, and hence interest rates will rise and this will be costly for mortgages, I think the IMF is also off kilter.

O course, there are risks involved in taking either step - in or out. The proper debate is to focus on the risks and benefits and try to debate on their quantum. Not everyone is stupid and could not grasp the challenges. There are issues of national pride which citizens rightly are willing to pay a price for, some even with their own lives as recent wars had proven. On top of that, the British can think they can do better than the Europeans, which is not something to be dismissed. I think it is a silly argument just to rest the whole argument on the point of the economies of scale.

In the end, the EU is a political not an economic argument. The idea arose from the question of what is Europe - which led to the quest to create a European identity to which the US can identify with - as an ally during war - rather than having to deal with so many soverign states, they just have to deal with Brussels.

Wednesday, May 11, 2016


Politics is an unsavory topic for me.

The truth about politics is that there is no truth in it. Politics contains only one's own ambitions and intentions concerning power. One pretends to use that power for the public good when deep inside, one knows it is for one's own personal pride, gain or vanity. The less politicians talk about themselves the better it is for everyone.

The problem with politics is this constant battle between the social good and personal gain. It is easy before one has the power to pretend that one is benevolent, and always will be. After having just got the power, one will try to make good the promises one has made and will most often find them impossible to keep. But on discovering that one could get away from it, one would ride along with the pretense of being benevolent and continuing to make more promises than one can keep. Before long, one believes that the power is rightfully one's own and all efforts will be made to hang on to that wonderful power which enlivens one so much with live and energy, to be able to do as one wish and to be able to pronounce one's opinions as if they are good values. The corruption of power has entered the person.

It is for this reason that one is prone to self-deception about one's own greatness and power that there should be a time limit to how long an individual can sit at the apex of the political power structure of a society, lest the ramblings of old people and lunatics become the wisdom of the day.

Ordinary people to whom politics is thrown upon them look at politicians like gods who throw scraps from heaven for their sustenance and survival. We pray for providence and goodness. The least that we dare to ask for is that the gods do not send ill winds and storms to destroy our families and our homes. We stay resolute to keep prodding on despite the odds in order to be able to take care of our loved ones; for we are heroes, and our loved ones need our protection from forces of evil from outside.

But there are those among us in a free democracy who cherish the ambition of taking power and with no money in their pockets and only a smile and sweet words, try to charm the rest of us that there is an evil that we must fight against and that they are the one who will save us. I never believe in that.

So I am caught in this lousy situation in between old seasoned liars and new seasoned liars. The dynamics of political change do not change, how the newcomers try to destroy the incumbents with all sorts of name calling and accusations which may or may not be totally correct. I care not for those accusations but I fear the unfamiliarity with the newcomers. The incumbents are long dead in their boots, gone beyond redemption.

The only consolation in this world of politics is that there is regular change of the underwear so that the stink does not nauseate. The faces of long-timers on either side of the political divide all look the same, grave and threatening but empty. They are only thinking about their dynasties. I favour constant injection of new blood, and shorter term for politicians so that no one can make a career out of such an important public function. They have got to learn to do real work sometime.

Saturday, May 7, 2016

Sarawak Election 2016

It is difficult to separate politics from economics, so here is my simple take on the recent event. The Sarawak election today concluded with BN retaining its two-thirds majority while DAP lost some seats.

The opposition was riding on the euphoria of the strong support in the Peninsular in the last election and all that it needed was for the East Malaysians to continue that momentum to complete the Last Push for the opposition coalition to take over the national government. Many Sarawakians flew back for that push but it wasn't enough. It was essentially a lost cause. Not many flew back this time and many didn't bother to vote. There was nothing much that could be done to change the national government. The only thing that was left was for a few urban diehards to register their discontent with the existing government policy which so far have had no benefit to them except policies which burden them further economically.

This being a state election, the state issues have all been substantially dealt with very quickly by the incumbent chief minister to the extent that he risked being labelled a dictator; and some did label him that. But he did not suffer from that labeling as ordinary people felt he solved real problems, and not merely engaging in rhetoric. The real problem with the previous state government was Taib but his retirement from the cm post had basically removed that sting from the opposition. The popularity of Adenan has made Taib a non-issue; we will probably see the end of the politics of character-assassination in the state.

The intense rhetoric of the opposition never sat comfortably with the people of Sarawak as they are more accustomed to soft-talk and compromises. Even when issues were raised, they were often done with great deference to traditional values. The more aggressive style of extremism verging on militancy could wipe up raging emotions, but fiery rhetoric still could not beat simple actions. But in some of the hinterland, there were concerns over ancestral land and heritage and ways of life and there were some show of resistance to radical change and modernisation.

The geography of Sarawak, being physically apart from the Peninsular, makes the development of the state difficult and expensive. This economic handicap and the inability of Putrajaya to conceive of an economic policy that is not wholly Peninsular- nor Malay-centric mean that politics as would be directed by Putrajaya would be resisted by the people, including those from the opposition. The people were listening to all the politicians as to what the politicians would do for them, and I think the people knew what they did.

The people of Sarawak had not been much bothered by the politics in the Peninsular until those politics adversely affect not just the Chinese and non-Bumiputra but also native Bumiputra. This is the time when we can see the Sarawak people acting as one and resist the enemy from without, including the current opposition. Hopefully a day will come when the opposition in the state is a bona fide state opposition, and not a branch of a Peninsular party. I am sure that the people of Sarawak are strong enough to provide their own resistance to an internal dominance.

Malaysians may not expect a Malaysians can be at peace and in harmony with all races regardless of race and religion, but Sarawak seems to have got it right in trying to work together in an amiable manner. Or is the world now so globalised that we all have to shout in order to be heard? Or are we merely seeking attention and fame, without substance? Sarawak may be an economically backward state stymied by being an adopted child, its leaders might have been blinded by greed, but after darkness a light will shine to show to path to redemption.

A strong government with a strong opposition is the way for a modern democracy to go, that would be anybody's wish. In the meantime, as the nation and its component partners learn to grow and mature in civility, a strong government with a sensible leader may be the way to go. The election results showed the wishes of the people.

Thursday, May 5, 2016

Education, Nationalism & Language

This is a perennial topic where discussion can go on forever because there are so many different angles to it. I am adding another one.

I think the key focus must be on the education of our young people for their own future and their own good. The ultimate purpose of education is individual survival of the person being educated. There is the master who has knowledge and hopefully wisdom. He is the master because he has learned to survive and now his role is to teach the young.

In traditional societies, the elders teach the young how and where to hunt and fish and plant crops and raise husbandry. To live in peace and harmony among the villagers, the elders teach manners and courtesy. There are customs of how things are to be done when certain things happens, akin to the standard practice instructions or standard operating procedure of modern organisations. The whole village also learn how to make peace with nature in hope of an abundant harvest and plentiful feasting.

At a certain point in the history of the current human civilisation enter religion which is also dictates a way of existence and survival in a certain environment, probably of a very harsh nature. The people are taught to keep faith, to defend their customs and traditions, and to kill off their enemies as self-defence or to disguise or hide their identities from their enemies. These are skills of survival.

In time, rational thinking and argument come in. The politics of democracy comes in, which is usually practised as tyranny. Religion gives way to the pursuit of material wellbeing and money. The means of survival requires young people to be able to read and write and count, be discipline and hardworking, be creative and productive and be everything that any capitalists would love to work to death for a few more pennies.

The people pay taxes for the government to employ experts to teach their kids to learn how to survive in this big and nasty world. Instead, the government twisted the system to inculcate nationalism which is a sense of identity which the elite politicians feel will enhance and prolong their longevity of their reign on earth. Instead of openness, they send in new half-baked people to indoctrinate young people that they are beholden to the false prophets for their well-being. So they lock the minds of the young people up into sterile cells where no thoughts are present except for the few propaganda items of privilege and exclusivity.

In so doing, the politicians on independence of the country from foreign exposure cut the entire nation from the rest of the world, close in onto their own limited language and old agrarian customs and foreign religions, feeling comfortable in their own familiar and shrunken world.

But the survival of the young generations and the young nation require that the young people must be open and versatile and think for themselves. They must not only learn the local languages but also the foreign languages of import. They must be encouraged to think for themselves and to argue against traditions and their elders because the outside world in which they and the nation is subject to are constantly evolving as the world tries to compete with each other. A nation that closes its door onto itself and thinking it is safe is containing itself in its own little enclosure, indifferent to the lack of the space their children and their children's children.

I have read arguments why the local language is also a language of science and discovery and I am of course not doubting that one can be in one's element thinking in one's own language. But it is not an argument against learning other languages and be conversant with them and be so good as to be able to think comfortably in foreign languages. Let not the slow ask the fast to slow down so that he can catch up.

I for one encourage multiple languages for they teach us to understand other cultures and other ways of thinking and looking at the world and each other. I am simply perturbed how limited and constrained the government of the day is, with its civil servants knowing only how to speak and write in their own local language and not being able to communicate with the rest of the world.

Focusing merely on the mother tongue is a dangerous proposition. The language used at home and in the market is colloquial. To be able to speak and write properly in the local language, there are also rules to be followed and therefore even for the native, the formal local language needs also to be learned and not everybody speaking the colloquial language will necessarily be good in the local language formally.

I conjecture that there are as many illiterate native speakers of the local language as non-native speakers. It is therefore likely that the promotion of only the local language will result in a nation full of illiterates compared to one where learning to read and write in different languages is conscientiously pursued as a matter of policy. I am saying that we should be promoting languages as a serious area of study in schools as opposed to the politicising of one language as the one and only one, to the exclusion of others.

In the modern world, it is instructive to learn Mandarin and other Asian languages too. In fact, for the nation to place strategically in the world, we should have experts in all the key languages of the world so that we have understand at the native level what is happening all around us. We cannot simply stand alone deaf and ignorant of the world.

At the very least, I would like the civil servant to be communicating to its citizens and the rest of the world in two or three languages - Malay, English and Mandarin. At least, show that Malaysians are not incompetent and that Malaysians can relate with others.

There is a need to expose the ignorance that is hiding behind the sole use of the local language in communicating with the people in our society. We were not isolationists in the first place. We were an open society but closed in on independence. Something went terribly wrong. It is not too late to turn around and face the world proudly.

Thursday, April 28, 2016


The interesting question to ask is who makes a better governor of the central bank - an economist or an accountant.

Self-deprecating economists would joke that since economic theory has nothing to offer now that monetary policy has deteriorated into this mindless expansion of the monetary base either by helicopter money or by quantitative easing, there is really no policy value from an economist. This could indeed be true and it is indeed a serious matter. Look at the present monetary policy stance of the issuer of the international reserve money who is fearful that even a slight notch up for the interest rate is going to send the whole world down into economic chaos. Well, that has not been entirely true. The main cause of the current global economic downturn and slowdown is the political cleaning up in China. As with all spring cleaning, we all have to lift our feet up from the ground and nobody can move.

Of course, the reality is that for a small fry like our nation, we cannot have an independent monetary policy. The only thing to do is to mimic what is happening in the US. This is a no brainer.

Nevertheless, an accountant and a banker may be a better person than an economist to be the governor. The accountant will not spend but will make money by saving up. This will be good to put the government budget in order. The banker will ensure that banks do not go overboard, extend themselves and make themselves vulnerable to insolvency. The accountant banker will ensure that the house will be need and tidy.

Now, I have always argued with the matriarchs in my household that a tidy house is a house not lived in. For a house to be lived in, the occupants will be busy with many ongoing projects at the same time and therefore will have work in progress all over the house. The house will be messy but there is order in chaos. This has always been the condition in which I like to see the economy in. A vibrant economy is a messy economy with everybody busy going about their daily lives and not being bothered by others or others bothering them.

Our economy is not vibrant with the economic growth committee laying out investments and directing what projects will go on. This is central planning.

But for the central bank, it is good to have a nice and tidy central bank. We are lucky.

Tuesday, April 26, 2016

Politics & Business

Politics and business seem to be badly mixed up nowadays, with politicians blatantly doing business and businessmen playing politics. But there is such a thing as real politics and real business.

Real politics is when the government sets about pursuing policies that champion the interests of the nation and the well-being of the general public. The government is the politicians and the civil servants. Politicians are supposed to come and go while the civil servants are supposed to be professional and know their stuff. But when ignorant politicians push policies down to inept civil servants to implement or when they listen to inept advice, we have an economic disaster in the making.

The current episode is bad politics killing off real business. Nowhere have I seen such an eagerness of a government to destroy the underlying foundations of an economy. The government seems to be at war with real business. Giving the benefit of the doubt, policies may be good but the mishandling of their implementation is a sure way to destroy the dynamics of real business.

The GST is a case in point. This is not my favourite topic, but the more I hear the more I am unhappy.

1. The GST is now justified on the ground that we are undertaxed as per the GDP compared to other countries. The blame goes to the black economy and therefore the indirect attempts to capture all transactions in the economy. But for all I care, the GDP number may have been blown up to show that the economy is doing better than it actually is by inflating on the growth of the services sector. And if we realise that the most incentivised sector of the economy is the financial industry with virtually zero tax on any profit made in the stock market, then that is a big chunk of the tax gone. There are no taxes on foreign investments, and the government even gives grant to foreign firms to invest here. So now real business must be properly taxed. At the same time, the government is trying to encourage entreprenuership through start-ups when even existing businesses are struggling to survive in the current environment.

2. The government is very happy to take the GST money from real business even when the invoices are not properly made. But it does not allow claims on the same ground. Is the government a money sucking machine? The government is incompetent to run the GST, being implemented without proper preparation. However the government is going to justify itself, for sure, the GST is a downer on the economy. How the strong will surely survive, I pity the small firms that cannot withstand the burden of having to cope with having to deal with the GST, and administrative as well as the tax cost.

I have applauded the government's policy on restricting foreign workers in the country for several reasons: It is time to move up the value chain. It is time to treat foreign workers here properly by paying them decent wages and offering them decent social services. It is time to take stock of the foreign workers we already have here, rather that importing more. There should be a comprehensive registration of all individuals residing in this country. It is time to ensure that foreign workers are healthy as many are employed in the food and beverage industry.

What happened? Well, real business has real problems registering their workers. End of business and end of story. The civil servants continue to enjoy their take-home pay and go on long training and long leave. (I think the annual leave of civil servants should be cut to 20 days a year and their annual training to not more than 3 days a year.)

Real business is usually small business. I don't think you can nurture young entrepreneurs when the environment is set to kill anyone struggling to make ends meet. The black market exists because not very well educated people are trying to cope in an unfriendly bureaucratic environment. I am not championing the black market. I am calling for a competent and efficient civil service.

I am of course by the racism in real business, when politics is involved in the business world. The government should champion all businesses for the national good. To have government departments championing racism is a bad sign. (I won't comment on religion.)

Politicians play politics, businessmen make money. That the right order of things. It should not be politicians making money and businessmen playing politics.

Monday, April 25, 2016


This being the 400th death anniversary of William Shakespeare, I thought I will write a bit of my relationship with his work which has nothing to do with economics.

For those of us who are now are old enough, there was a time when we had to do Shakespeare for examinations in English Literature. The exam piece changed from year to year, and for us it was Macbeth. It started in Form 4 and the task was to get ready for exams in Form 5.

While we were struggling with the play bit by bit in the first year, we were getting a bit confident by the second year. But exam was still a drag and there were many extra-curricular activities for us to participate and enjoy. One fine day, a few of us decided that the only way to force us to study really intensely on the play was to play it! We decided to tell the Principal of the school that we wanted to put up the play for the school concert that year.

We immediately tried to figure the enormity of the task we had got ourselves into. We had to decide how many people we needed to play the characters. We needed the three witches to do the opening. We needed Macbeth and Macduff to do the main fight. Lady Macbeth had to do her soliloquy. There you all, we needed only six people to get the show going.

Of course, the play being only an item in the school concert, we had a time allocation of half an hour max. We started doing what was (and still is) unthinkable and probably sacrilegious - editing Shakespeare! Well, we made a photocopy of the whole play and started crossing out all the portions that we couldn't do. That was quite a lot. There would be no forest of Birnam moving to Dunsinane Hill. There would be no bedroom scene between Macbeth and Lady Macbeth.

Costuming and the props were no problems. We dressed up in t-shirts draped over with some shawls, and short sarongs. We used tobacco and glue for beard which stunk like hell. We got the woodwork club to make swords for us. We used dustbin cans wrapped around with cloth as shields. The three witches dressed in black enhanced with lighting; the cauldron could be imagined as nobody could see in the darkness.

We used the play to sell the school concert tickets to other schools in town as a short cut way to learn the play for the exams. I think we didn't do that badly. We thought we did quite well because of the excitement of doing it and couldn't think of any other things. We did what we set out to do and did it.

On the following weekend, the local newspaper did a small write-up saying that that it was the first time that Shakespeare was staged with local costumes. We weren't bothered for we were then busily thinking about how to pass the exams and worrying about what we should do next with our lives.

I am happy to report that all the players in the play eventually all flew the nest and left the small town in search of greener pastures. We are planning a class reunion and maybe the small group of us who are still alive and well could reenact the play for old time's sake.

"When shall we three meet again? In thunder, lighting or in rain. When the hurly burly is done. When the battle's lost and won. That will be ere the set of sun. Where the place? Upon the heath. There to meet with Macbeth...Fair is foul and foul is fair. Hover through the fog and filthy air.

Is this a dagger which I see before me? The handle towards my hand. Come, let me clutch thee.

We fail? But screw your courage to the sticking place, and we shall not fail.

Unsex me here, and fill me from the crown to the toe top-full of direst cruelty."

So, it is all about power and power. There is no economics. Whoever takes the throne wins. Ha! Same old story.

Wednesday, April 20, 2016

National Car Project

The idea of the national car project came from the jealousy that foreign car makers could come to this country and assemble their cars and sell them cheap here. Why should we let these foreigners make money here when we could easily monopolise the market. In addition, we could learn and know how to make cars and we could become a super duper nation of science and technology.

This idea came from a bunch of other ideas connected with the desire to industrialise the nation, as per the national plan of raising productivity growth and value add in order to bring about higher incomes. Someone came out with the idea that we should also be manufacturing steel and building a six lane highway for people to drive up and down and therefore creating a demand for cars. All these ideas were implemented and failed.

The reason why car makers go to each market and assemble their cars there is that they are running on grand economies of scale and are trying to reduce the cost of production and making their cars cheaper so that more people can buy. There is a certain fixed cost in creating new platforms which can be repaid by selling many many cars. This basic economics is good enough to kill off any new competitor and makes the car industry the exclusive playground of a determined few in the world. Any body else coming into this game must be a subset or a derivative.

So the national car project basically learns to assembly a car that is also designed and manufactured elsewhere. Whatever we had tried to do to make the car project a national project is to try to increase its local contents which can at best be marginal because the basic cost is the fixed cost. If localisation means deterioration in quality as a result of inexperienced in controlling quality. If the purpose of the national car project is a social project of creating jobs for locals, then there could be the reluctance to invest in automation especially if the machinery is made overseas. In other words, we have basically set ourselves up to lose right from the very start. We are going to clone an existing product from a competitor and reduce its quality and try to sell it at a lower price. Obviously, the market we are trying to target is the lower income groups.

However, it was discovered that the localisation did not reduce the cost of producing the car and in fact increased its cost. The key reason is the loss of any advantage of economies of scale because there wasn't any. There are then the issues of quality of parts and assembly which all added to a major PR negative. In any case, the solution to this was to impose import duties on imported cars and this has to be done by a colossal amount in order to be able to price the national car more competitively.

With now a higher priced car than an imported one without duties, the only way to sell the car is to literally give it away through easy car financing schemes. One could (and still can) drive a brand new car away with a small downpayment and abandon the car when one cannot repay. This is our car version of the infamous sub-prime lending. Nonetheless, what this means is that we have been pouring the national cars on our road system everyday at the rate at which they can push off the assembly line in a day.

We now have a recipe for national road traffic congestion disaster. Before long, all roads are clogged up and new roads have to be built for these cars to drive on. In the past, we could limit credit for hire purchase as part of monetary policy; today, we have no hire purchase policy except schemes that relentlessly push more and more cars on the roads. With the national car project, we have abandoned any planning for the public transport system with public housing and sustaining townships. We just have cars and cars on the roads. (The current afterthought on the MRT is an attempt to solve some problems of the past, not planning for the future.)

With poorly made cars being put on urban roads and country roads, when these cars go on the expressway, they become potential flying coffins. I am not entirely surprised that we are now number one in the world for fatal car accidents.

I am convinced that the national car project must be scrapped so that no more good and scarce money should be thrown to support it. The national car project of course is supporting a community of vendors and car sales people and even lucrative car mechanics, but it is not as if we are closing down the car industry which we apparently nearly have by our bad policy. It is time we correct the car industry policy, by killing the national car project and reviving the national car industry. Those from the national car project can still be redeployed within the local car industry, when the national car project is sold to the private sector. It is an economic efficiency issue.

Let us reduce the adverse impact of cars on our environment by reducing the number of poorly made cars on our scarce roads. Let us put good public transport systems in our major urban centres. Let us do proper town planning. Not just the Klang Valley. We can even remove the import duties on cars and control the number of cars on the roads by other means. It is time that we all learn to think about the policies on these issues.

Monday, April 18, 2016

Banking - Hidden and Regional

I read with great interest the changing of hands of stakes in the banking sector. Could this be the final re-emergence of the quiet one when old age, the Panama Papers or the end of an era is finally making the day of reckoning coming close at hand? Even President Raul Castro has to declare that the old guards must now really call in a day and let the young ones chart their own future. There is no greater curse in the world than a few arrogant fools think that they are the only ones who should rule the world and make the world go the way they want it to go. In the end, God is great and all men and women must die.

This post should be short and is at best conjectural. I cannot help myself in trying to put down my feelings on this issue.

Back in the old days when the world collapsed on us as a result of our own economic mismanagement when politicians controlled the finance of the nation and influenced banking decisions, the political decision was to consolidate the entire banking system into ten large banking groups ostensibly to better ensure the ability of banks to withstand major defaults and errors in lending (the banks would call them systemic failure which I think is a silly idea). At one stroke, all the small regional banks were wiped out and growth of the nation consequently was concentrated in Kuala Lumpur and Putrajaya which thereafter raised the need to solve city congestion problem, the need to build the MRT and the need to impose GST to fund it and other mega projects of the government.

We are now stuck with this PM/FM composite post of national inflation and currency depreciation where the central bank has lost control of the monetary policy and has nothing left but its own sense of authority and dignity. The counterplay between the treasury and the central bank has been lost and the central bank gives up on its independence on the conventional wisdom that the real central bank is the US Fed.

As men and women grow old and they will die even if they do not want to, there is a need for closure and the unraveling of the great matrix of cross-holdings just in case one suddenly dies and the great fortunes lie in the hands of non-family members and the great scam becomes an exercise in futility and foolishness. It is a good time to wrap up for one's progeny.

I was glad to read the suggestion by HRH The Sultan of Johor that Johor must have its own bank to be called the Bank of Johor to fund the development of the state and the funding requirements of its people. I agree. There is a need to revive the presence of regional banks which cater to the financial needs of their respective regions. The CEOs of the big banking groups in Malaysia which are headquartered in KL and Singapore and other major cities would not appreciate the needs of regional centres and their need to grow as the world grows bigger. After the centralisation of banks, I think it is right that the banking policy should be to diversify the ownership of banks and give rise to new regional banks to be established.

One tiny step for the PM/FM to move the nation forward in the right direction.

Monday, April 4, 2016

Macroeconomic Adjustments: Capital vs Labour

It is clear that the world is undergoing a major deflation, after years of priming the pump to inflate the global economy beyond its ability to absorb, given the current level of technology that we have.

We now have a monstrosity in our hands, the trillions of dollars that are now sloshing around the global financial markets looking for a safe home to hide. These short-term capital flights looking for high returns are the product of money printing by irresponsible central banks around the world led by the US Fed which now has a moral dilemma of how to stop printing the cash and not be blamed for the ensuing deflation. The implosion of the global economy is a natural consequences of years of excessive liquidity which has left stock prices high (and refusing to crash), real estate prices way beyond the reach of ordinary working people (and still refusing to crash), banks with loans heavily loaded on stock and shares and real estate lendings (and still refusing to crash).

The ensuing deflation and depression are the natural outcomes of decades of money printing which central bankers should have seen in the first place, but instead had argued with breathtaking profundity of how they are saving the world economy and triggering off the ICT revolution when no one is asked to do real work.

So the policy wisdom is now how to prevent deflation and depression so that we do not trigger off a third world war (which probably is already happening with madmen with cash getting hold of weapons of mass destruction now for real). It is still this thinking of a loose monetary policy that is taking hold of the minds of so-called wise central bankers who did nothing but to subject the real economy to the vagaries of global tidal waves.

For sure the argument is not a credit squeeze which would basically lock everybody out of the banking system, but for a series of bold steps to raise interest rates especially deposit rates to encourage savers, curb consumption and challenge the capitalists to come up with ideas and schemes with a decent rate of return.

The capitalists probably now have so much real estate that is going to last them many lifetimes. But of course there is excess capacity in real estate with building left unoccupied because those who need housing do not have access to shelter.

It is an unthinking capitalist who imagines that the only way the world is going to grow and prosper is to have an evergrowing population that is going to do all the hardwork to obtain decent returns for the capital of capitalists. We know this to be the mere extraction of surplus value of labour. There is no reason why just having money or property is going to make not having to labour in their lives.

There were two world wars where significant portions of the world population were killed. But the aftermath were economic boom because everybody who were left alive were galvanised as a society to work to survive and live.

It is disheartening to read in modern day Japan that young people are being taken advantage of by companies which forced people to work inhumanly long hours with wages that no human beings can live on and when workers are forced to take their own lives as the only way out of their predicament.

Japan has failed as a national economy because the government and the corporate sector collude to steal resources from the people by printing money, currency depreciation, inducing inflation, underpaying wages and with the government and the people going into debt which eventually must be paid by the younger generations. In the meantime, the Japan companies go global to seek better returns overseas and leave the kids at home to fend for themselves by working their butts off for some food in their stomachs and nowhere to go.

It is quite alarming that youth unemployment has grown to 25% and 50% for most economies, advanced or not. There seems to be a real disconnect in the globalised economy where a handful of people can earn more than several nations can in a year and that so-called wealth is not sufficiently spread around by bankers. Bankers are doing an appalling job allocating financial resources, preferring to build cities of ever-growing densities ostensibly to create better economies of scale and "fuel efficiency" centred around casino-type activities.

Governments who measure the libido of their economies by the index of their respective stock market are probably the most corrupt, for these politicians are probably managing their personal fortunes in the markets with projects they are pushing. Everybody are in it to suck the life juices of the ordinary people through all kinds of asset play.

There really is a need for bankers and the financial market to sit down quietly and analyse the economy and decide on the directions of their loans and nuture the current generation of young people who are dying for a toe-hold into the unreal world of the economic matrix.

Monday, February 1, 2016

Negative Interest Rate and All That

In line with Abe's goal of creating inflation that the Bank of Japan is now resorting to introducing the negative interest rate for its customers - namely commercial banks - for keeping their deposits. As of January 29, the central bank will charge 0.1% p.a. on the new deposits of commercial banks kept with the central bank. Luckily, the negative interest rate does not apply to ordinary customers at financial institutions.

The idea is to discourage commercial banks from being prudent and to encourage them to lend to ordinary people so that they will spend more money and increased the demand for goods and hence raise prices in general. But this is a foolhardy task.

Japan has been suffering from deflation for a quarter of a century since the burst of the asset bubble in 1991 after the introduction of the newfangled technique of quantitative easing in 1986. The QE was introduced to reverse the sharp appreciation of the yen forced on Japan by the US in the Plaza Accord. The US economy was weak and it accused Japan of undervaluing its yen.During the asset bubble, the stock market and the real estate market rose to unprecedented heights with banks giving out housing loans that required three generations to pay. The bubble burst when the central bank feels that speculation in the markets had gone mad and there was a need to stop that. The markets collapsed when credit tightened and interest rates rose.

The fact that the Japanese economy has slowed and deflation has continued for so long point to the problems at the banks. With such huge non-performing loans affecting millions of people, the government just cannot push for foreclosures to solve the problem. It would put the entire banking system and the population into bankruptcy. At the same time, the high yen had forced Japanese multinationals to go abroad to places such as Malaysia and thus leaving a vacuum in the SME sector consisting mainly of family-owed companies. Japan hasn't so far recovered from this structural shift.

It is natural that nominal wages have not risen in the midst of weak labour demand, and therefore there is no scope for real estate prices to recover. Instead, real estate prices are looking for the correct level of nominal wages, and if this could not be found at home, then they will have to wait for stronger foreign buyers. Japan has no opened its doors to foreign tourists and it won't be long before these tourists fall in love with the lovely Japanese manicured townships and buy them up, especially those from China.

Lessons for Us

For us here at home, we must recognise a structural problem when we see one, instead of thinking that we are still dealing with a temporary marginal demand adjustment problem.

The impending rise of global interest rate, although the idea is somewhat challenged by Japan's interest rate, and the shift of global money flows in light to that expectation is a structural shift which we have not see before. This is coupled with the adjustment of the oil price back down to normal which should put an end to the grandiose schemes by the government in using demand management to support an income that is not sustainable.

The government here should really cut down on its expenditure so that it does not have to support the huge foreign worker population. The increase in the foreign worker levy is a right move. But the government must cut down on the operations of the government. Senior government servants are paid exorbitant salaries (perks included) for prestige but not talent. They should be given titles that befit their subservient status, rather than as honoured guests in all kind of functions.

I really won't really worry about public transport. With the recession, there will be less cars on the roads. The public transportation in any case does not serve those who drive fancy cars. I think real estate developers should be asked to contribute to the building of the public transport to or near their properties.

Encouraging enterpreneurs is always a good idea. But how it is being done will determine its success. Entreprenuership should not be seen as a special activity that is carried out by a select group. It should be encouraged as a way of life. This calls for a change in mindset starting with policy that is open to all citizens and there are no privileges to selected groups. The system encourages the society as a whole so that everybody has equal opportunities. Those who are clearly handicapped should be helped but should in no way be allowed to obstruct the general progress of the whole society. This policy is also translated down to the banking system which should be liberated to allow for smaller boutique banks that cater to special groups rather than lumping every banking and financial functions under big lumberous megastructures.

To compete in the world ahead, the government should assume itself ignorant and therefore playin the supporting role to the private sector which must take the entire risk of their endeavours. In no way should the government guarantee the financial profitability of projects that bear great benefits to a few at the expense of many. The government should not guarantee private profit. The market rewards those who succeed and punishes those who fail. The government must not penalise those who succeed and rewards those who fail.

We at home should gear us for a few years of deflation and a slow growth. The 3% cut in the employee's EPF contribution is the clearest demonstration of the poverty of policy thinking at this critical juncture of our national economic life. Begone your naive Keynesianism. We are now in post-Keynesianism. Our budget deficit has ballooned to enormous size. The government is now trying to take more money from the people to patch up the budgetary holes. Our people are over-geared and facing unemployment. We are now in post-monetarism. Easy monetary policy has gone kaput. We are drowning in liquidity. Let us try the see things a bit clearly.

Saturday, January 23, 2016

The People Protest Again (TPPA)

I am writing here as per request.

I initially had no interest in these things because (a) the economy is already in deep trouble and what difference would this TPPA make even if it is for the worse; and (b) would anybody in government bother to rethink carefully if they know how to protect the national interest instead of the interest of the party. (But seriously, the party is over and now we have to clean up the mess.)

I think I may have something to add.

TPPA stands for the "Trans-Pacific Partnership Agreement."

Trans-pacific is a very USA terminology for when they look over the Pacific Ocean, they are looking at the whole of Area. (When they look over the Alantic Ocean, they are looking at Europe.) So the TPPA is a very American intiative. The US wants it, not us in Asia.

It is obvious that China is not included in the TPPA negotiations. For one, China wouldn't be so stupid to be tied by the US. Two, the US is obviously tying up with its "allies" in Asia in order to counter China which has surged to scary heights economically. The US is in decline economically and is in sore need of a strategic move to at least play defensive against China.

1. If I were the US, what I want from the TPPA is for all partner-nations to operate subservient to US companies with the US government setting the rules of the game. In other words, the US government will play judge and jury in any business disputes which US companies would surely raise if they were to lose their investments because of country risks.

In the TPPA, there would be no country risk for US companies and if there is, the country must pay. Country in the end means the people in terms of inflation, currency depreciation, high interest rates and high unemployment, as the errant country must pay a huge sum in US dollars and its government must run a budget deficit to do so.

2. US companies are holding many copyrights and they wish to ensure that they can extract rent out of these copyrights. Areas to attack are music, films, medicine as well as technology. Since modern technology is being used not only to save labour but also for entertainment, it is therefore likely that entertainment for the masses will an expensive hobby.

3. It is obvious that US service companies want to capture a chunk of the professional services industry in Asia. They have already done so under WTO, and it is likely that under TPPA, they will deepen it with legal implications.

4. I agree that worker conditions must improve so that every working person earns a living wage. There should be provisions for housing, medicare and schooling for their children if we want to host workers in this country. This is how a country grows, by taking care of the people who work. Only when we have this baseline drawn properly can this country move up the value chain and be a high-income economy.

My final point is that, if Malaysia really wants to sign the TPPA with the USA, then the government should also pursue such a liberal and liberating policy in our own domestic economic policy where there are no quotas and restrictions for the selected few in our own society. If we are glad to appease ourselves with foreigners, then we must also be prepared to treat all our citizens as equal.

Wednesday, January 13, 2016

Malaysia Economy 2016

I am surprised that the prime minister has to spend time to revise his budget as the price of oil plunges further.

If the economics department of the government were to have been staffed professionally in the first place - rather than employing part-time MBAs and jack-of-all-trade consultants to disguise the emptiness - somebody would have (a) done a risk analysis on the oil scenario that would swing either way around the USD 50 a barrel at the time of the budget, and (b) foreseen the rise of US interest rates two or three years ago and the impact on the stock market, the real estate market and the ringgit and local interest rates.

The paucity of strategic policy thinking and the lack of understanding of how the real economy of the country works is shown up clearly by the mishandling of the GST, a topic which this blog has covered at length and with great passion arguing against it.

The GST cannot be the saviour of the national budget. The use of the GST, without the abolishment of the personal income tax, is an abuse of the theoretical argument for indirect consumption taxes. That the GST can be saviour of the national budget must mean that the income and welfare of the general public must deteriorate by the same amount of the revenue raised by the GST.

The current call by the government for all enforcement agencies to raise their tax revenues from customs, inland revenue, fines and other miscellaneous sources including increased dividends from listed companies, must be seen as a desperate act to "make the numbers look good for the rating agencies" and the ordinary people must suffer. But for what?

That the government can continue spending recklessly? The civil service has been drained of professionalism but that lack of professionalism is costly, not only in terms of lack of work done and the end to employ consultants to do their jobs, but also the need to spend most to send them for courses in reward of their incompetence (pay, and no need to work), the tendency to organise PR activities to sell the image of the government rather doing the actual delivery, and the tendency to triviality (re dress codes to be eligible for government services).

The biggest white elephant will be the public transport system now being built in KL with money collected from all states. By the time it is done, the economy will be in the deepest recession. It is not stimulating the economy, nor will it solve the urban traffic problem. With the recession, there will be much diminished traffic on the road.

What needs to be done for the economy is a complete overhaul of the current system. There is too much concentration of economic power in the hands of a few organisations who therefore act as monopolies. They extract fees but do not improve their delivery. TM's Unifi is a sham. All the utilities can raise their rates and nobody can complain. The call for improved dividend payouts by listed monopolies can only mean increased fees across the board and a general deterioration in the purchasing power of the ordinary people.

The closure of the formal economy to half the population to a third of the citizenry does not only mean a multiplier effect on the contraction of the potential of the local economy but a general mental blockage about trading with the rest of the world. Unless, of course, the objective is to exclude the local non-inclusive while sharing the largesse with the politically-inconsequential non-locals.

It is this paranoid and distorted thinking on nationhood and the deliberate repression of a selected section of the society that is destablishing the social fabric and the economic engine. The lack of incentive to invest in one's own country and the need to squirrel away ill-gotten gains in some foreign hideouts merely means that the local currency can only be weak.

It can be observed that after every boom in the economy, the currency will appreciate during the boom but deteriorate after the boom. This happened in every decades since 1982. It cannot be attributed to one regime but the entire economic system that has been set up to provide economic gains to a particular racial and political group.

The nation has come to logical end of the economic system that was hoisted in 1970. The 1970s saw the transformation from a professional civil service to a race-based system and the reclamation of so-called national assets from foreigners. The 1980s saw the failures of the autarky and the beginnings of dealing with foreigners who were erstwhile enemies. The 1990s saw the transformation of the economy from agriculture to manufacturing and the wholesale building of infrastructure for industries, funded by short-term foreign capital in collaboration with local political powers and the eventual collapse of the currency. The 2000s was spent covering up the damages with oil money. The current decade attempts to use the money that is not there to bolster the economy with big public projects. There is simply no encouragement of local citizens to invest in value-added businesses by a revamped banking system that is not focused entirely on the stock market and the real estate market.

Are the local government system and the local banking system geared towards promoting private investments not only in the old industries (plantations, real estate) but new industries and services which the modern world wants? The way the local immigration policy is conducted, we are painfully exchanging high-calibre citizens for disease-born illiterate workers from the bottom of other countries.

Politicians and senior civil servants should cut down drastically on their overseas travelling and should instead spend more time thinking through on the nature of local issues and how they may be resolved in our own way, rather than plugging standard solutions from consultants. It is only when we learn to solve our own problems that we can begin as a nation to be able to stand on our feet and bring happiness to our own people.