Here's a video of the Sarku 2000 in northern Malaysia waters, South China Sea during the monsoon, with 16-ft swells and 40-knot winds.
Sah! Kes Najib Razak Cacat
15 hours ago
Friday, November 28, 2008
Thursday, November 27, 2008
Governance Reform in Asia: Cultural Perspectives
SPEECH BY
TUN DR MAHATHIR BIN MOHAMAD
AT THE NATIONAL COMMITTEE ON GOVERNANCE:
2ND ANNUAL TOP EXECUTIVE FORUM ON GOVERNANCE
IN BALI, INDONESIA
ON 28 NOVEMBER 2008
1. When I accepted this invitation to speak on “Governance Reform in Asia: Cultural Perspectives”, the financial problem in the United States i.e. the sub-prime loans by United States banks seemed to be an American problem which had nothing to do with the rest of the world, and certainly not with Asia.
2. The international community was still talking about Globalisation, a borderless world and a free market. Countries, especially developing countries were being urged to change their ideas about political, economic and social management and policies so as to cater to the global village where trade and capital flows should be free and unrestricted, where foreign involvement in local affairs should not be considered as being against the principle of non-interference in the internal affairs of independent nations.
3. Asians are culturally conservative and orthodox. They prefer to do things the way they had done in the past. But Asians also have an inferiority complex and believe that the Europeans are superior people with brilliant ideas and ways of doing things. The Asians subscribe to the Eurocentric world and would always try to emulate the Europeans.
4. Since the first contacts with Europeans some 600 years ago Asians had become accustomed to adopting European ideas about politics, economics and social systems almost without question. This has become a part of the Asian culture.
5. So when the Europeans came with ideas about globalisation, borderless world and free trade, the general tendency was to accept
and to adapt to these ideas despite Asian countries having achieved independence. Reforms of governance must be made so as to accommodate the new vision of the world as a global village, to make possible the free flows of capital and the sanctity of the unregulated markets.
6. But even as these things were being initiated the world came to realize that the American financial crisis was not going to be confined to America alone but would engulf the whole world. All the systems of the west seem to be crumbling. Not only are they not delivering the expected benefits that they seem to have done to the world’s economy in the past but they seem about to destroy it.
7. Since globalisation and a borderless world would actually give better access of the American system and practices to all countries, including those in Asia, the question arises as to whether we should carry out reforms which would facilitate America’s and the West’s financial and economic crisis spreading to our countries.
8. I do not think Asians would want to be dragged down by an economic and financial crisis not of their own making. If we do not want this can we slow down the reforms including reforms in governance so as to minimise the fallout from the crisis in the rich Western countries. Can we in fact introduce reforms which can protect us more effectively than whatever practices that we have in place now?
9. In other words should we be carrying out reforms of governance to facilitate globalisation and free trade as we had planned or have been urged to carry out?
10. We need to rethink. If we are going to initiate reforms in whatever field we need to know what is happening to the world today in these fields. In particular we need to understand banking and finance better. The understanding may help us avoid changes and reforms which may have been the cause of the financial crisis.
11. There is evidently something wrong with the world’s monetary system. The Bretton Woods agreement provided for gold to back currencies. But the rich countries decided to go off the gold standard. Only faith determines the value of currencies including the US Dollar which was designated the reserve currency.
12. Without gold the US Dollar has no backing at all. It is basically a useless piece of paper. Only the demand for the US Dollar to settle trade payments keeps the value of the US Dollar up.
13. It is doubtful if the United States knows how much US Dollar is in circulation in the world. Its very poor security feature also makes it easy to forge.
14. If the United States manages it finances well the faith in the US Dollar would be justified. But the United States owes the world an estimated 14 trillion dollars, an amount which it can never hope to pay. For years the United States suffers from twin deficits. And everyday the United States Government has to borrow 1 ½ billion dollars to finance its administration.
15. On the top of this the United States banks had not been prudent. Without caring about their assets and resources they have lent huge amounts of money to high risk borrowers, particularly for the purchase of houses. The earnings of the banks were based on the expected interest on these loans.
16. To securitize the loans they were bundled up and offered to insurance companies. It was thought that the risk would be taken care of by the insurance companies. The mortgage companies also acquired these loans.
17. What brought down the banks, insurance companies and the mortgage companies was the huge total amount of the loans. They run into hundreds of billions. When the risky non-performing loans became bigger than the good ones and the collaterals have no buyers the banks could not recover the loans. The insurance companies were also unable to pay the banks because of the huge sums involved. Neither could the mortgage companies.
18. The main reason why all these things happen to the United States is because the introduction of numerous high return financial instruments had diverted investments from the real business of producing goods and services to investments in these financial instruments, which include risky loans, secured debts, collateral debt obligations, swaps, derivatives etc etc. Most people don’t even know what they are.
19. The free market also contributed much to the financial crisis. The theory is that markets can regulate themselves. When prices go down because of oversupply, production would be reduced and prices would recover. Governments should leave the markets alone.
20. But markets are about making money, maximising profits. The greedy soon found that shortages and oversupplies can be artificially created and manipulated. By creating an artificial shortage the prices would go up and the seller can make a high profit. When an oversupply situation is created by repeated selling, prices would fall. At that stage the goods could be bought and delivered to the buyers when prices were high, through yet another artificially created shortage.
21. That was what happened when currencies were traded.
22. Seeing what has happened to the United States and Europe should we carry out reforms of governance to enable all the systems and practices in those countries to be freely applied in our countries, in Asia. Although traditionally Asia would follow Europe, should we stick to this tradition, the Asian culture even though if may bring disaster to us.
23. I think we should think very carefully. Opening borders can result in the crisis of the United States and Europe assailing our countries. Yet we still need to deal with these powerful economies.
24. I am not competent to suggest the reforms needed in the circumstances. Asian countries have a need to make adjustments to the realities of the globalised world. We cannot isolate ourselves. In fact our growth had depended on the wealth of the Americans and the Europeans providing us with good markets.
25. If we allow them to go under or we do something that would destroy the economies of these countries we would lose the lucrative market. And we would also lose a source of capital.
26. We cannot simply shut our countries to these collapsing countries in order to protect ourselves. But we can be selective in how we accommodate them based upon the role we play in relation to them and on the basis of our economy.
27. The countries of Asia which have been most affected are those which succumbed to the easy money offered by the many financial instruments created by the brilliant minds in the financial industry in America.
28. On the other hand those which are too poor to invest in these high return instruments via the hedge funds or directly are not much affected.
29. The reforms of governance needed must therefore be selective in character. Whatever may be the reforms, there can be no doubt that Governments must come back to regulate and to supervise. It will make the free market less free perhaps, but that is a small sacrifice to make in order to minimise the effect of this unprecedented economic meltdown.
30. Bailouts must be regulated so that they adhere to legitimate banking practice. Insurance companies and other funds, including pension funds, must be subjected to Government initiated rules and supervision so as to reduce exposure to high risk investments.
31. Inflow of foreign funds must also be overseen. One of the problems faced by unregulated investment in stock market is the massive and sudden dumping of shares when things look bad or are expected to become bad. The sudden outflow of funds will have a deleterious effect on a country’s economy.
32. Foreign holdings in any local company should be limited. This is especially so for banks and insurance companies.
33. Governments must be prepared to regulate free trade. Where necessary import duties and excise duties should be used to protect local industries.
34. Exchange rates need to be realistic. Free floats needs to be looked at with caution. Where possible fixed exchange rates may be adopted and currency trading be made illegal.
35. Whatever the policy adopted to cope with this worldwide economic crisis, reforms of governance must still be made to provide for efficient Government i.e. efficient bureaucracy. Efficient bureaucracy must mean minimal bureaucratic procedures.
36. Corruption is the bane of all countries. It cannot be totally eliminated. But it can be reduced if bureaucratic procedures are minimal and take the shortest time possible. Any delay must suggest corruption and investigations must be carried out.
37. Government requirements in order to gain approval of anything must be very clear and must be made known to the public. Where compliance is full there should be no delay in approvals.
38. Being business-friendly is necessary in order to maximise private sector contribution towards economic development. It is the duty of Governments to find out what complaints the private sector has and to remedy them.
39. Some of what has been mentioned regarding reforms of governance are not really reforms. And some of the others would be too late to prevent the effects of the financial crisis of America and Europe from hitting Asian countries. But they are necessary nevertheless. They may be able to reduce the impact and perhaps enable earlier recovery.
40. The countries of Asia will have very different problems depending on the stages of their development, their resources and how much they are hitched to the global financial systems. Those which have depended on foreign credit or have been involved in investments in foreign funds would suffer most.
41. On the other had those with large reserves in foreign currencies or have big savings may be able to reduce somewhat the impact of the crisis.
42. Whatever may be the impact of the financial crisis the judicious measures in the governance of the economy will still prove helpful. The important thing is to ignore old habits of imitating everything the rich western countries does. Asian countries must in fact initiate changes, including those to the monetary and financial systems.
43. Asians have always believed in the role of Government in regulating institutions. The world is about to view Asian practices and systems more positively. Asian countries must therefore make their voices heard. And this includes the small developing economies as well. It would be fatal for them if they allow, as in the past the rich and the powerful to devise the systems by which they must all function. In particular the banking system and practices need to be looked at from the Asian developing economies point of view and interest.
44. Governance is defined as the act, process or power of governing, As the situation surrounding government changes, there must also be changes to governance to cope with the new situation or surrounding.
45. What needs to be done may constitute reforms of governance.
46. But reforms are often constrained by the culture of the people involved. There is no doubt that Asians subscribe to different values even among themselves but more so between them and the Europeans.
47. In a Eurocentric world Asians tend to accept everything that came from the West i.e. from the Europeans as right and proper. It is difficult for Asians to reject what originates from the Europeans.
48. But that culture, that blind acceptance of the systems and ways of the Europeans must be modified, if not discarded.
49. What we are seeing today is the collapse of a very fundamental European institution, that of money and banking.
50. It is not enough to just tweak our present system of governance. It seems that we must be prepared for radical change. And Asian ideas must find a place in the development of these changes.
51. As the saying goes we have to go back to the drawing board. We have to question the system we have used for centuries. We have to consider redefining them, introduce new rules and regulations and provide for greater governance.
52. We may have to throw out the system altogether and devise a new one.
53. All these are not in our culture. But our culture must not stand in the way of necessary reforms, if it means saving our economies and our states.
TUN DR MAHATHIR BIN MOHAMAD
AT THE NATIONAL COMMITTEE ON GOVERNANCE:
2ND ANNUAL TOP EXECUTIVE FORUM ON GOVERNANCE
IN BALI, INDONESIA
ON 28 NOVEMBER 2008
1. When I accepted this invitation to speak on “Governance Reform in Asia: Cultural Perspectives”, the financial problem in the United States i.e. the sub-prime loans by United States banks seemed to be an American problem which had nothing to do with the rest of the world, and certainly not with Asia.
2. The international community was still talking about Globalisation, a borderless world and a free market. Countries, especially developing countries were being urged to change their ideas about political, economic and social management and policies so as to cater to the global village where trade and capital flows should be free and unrestricted, where foreign involvement in local affairs should not be considered as being against the principle of non-interference in the internal affairs of independent nations.
3. Asians are culturally conservative and orthodox. They prefer to do things the way they had done in the past. But Asians also have an inferiority complex and believe that the Europeans are superior people with brilliant ideas and ways of doing things. The Asians subscribe to the Eurocentric world and would always try to emulate the Europeans.
4. Since the first contacts with Europeans some 600 years ago Asians had become accustomed to adopting European ideas about politics, economics and social systems almost without question. This has become a part of the Asian culture.
5. So when the Europeans came with ideas about globalisation, borderless world and free trade, the general tendency was to accept
and to adapt to these ideas despite Asian countries having achieved independence. Reforms of governance must be made so as to accommodate the new vision of the world as a global village, to make possible the free flows of capital and the sanctity of the unregulated markets.
6. But even as these things were being initiated the world came to realize that the American financial crisis was not going to be confined to America alone but would engulf the whole world. All the systems of the west seem to be crumbling. Not only are they not delivering the expected benefits that they seem to have done to the world’s economy in the past but they seem about to destroy it.
7. Since globalisation and a borderless world would actually give better access of the American system and practices to all countries, including those in Asia, the question arises as to whether we should carry out reforms which would facilitate America’s and the West’s financial and economic crisis spreading to our countries.
8. I do not think Asians would want to be dragged down by an economic and financial crisis not of their own making. If we do not want this can we slow down the reforms including reforms in governance so as to minimise the fallout from the crisis in the rich Western countries. Can we in fact introduce reforms which can protect us more effectively than whatever practices that we have in place now?
9. In other words should we be carrying out reforms of governance to facilitate globalisation and free trade as we had planned or have been urged to carry out?
10. We need to rethink. If we are going to initiate reforms in whatever field we need to know what is happening to the world today in these fields. In particular we need to understand banking and finance better. The understanding may help us avoid changes and reforms which may have been the cause of the financial crisis.
11. There is evidently something wrong with the world’s monetary system. The Bretton Woods agreement provided for gold to back currencies. But the rich countries decided to go off the gold standard. Only faith determines the value of currencies including the US Dollar which was designated the reserve currency.
12. Without gold the US Dollar has no backing at all. It is basically a useless piece of paper. Only the demand for the US Dollar to settle trade payments keeps the value of the US Dollar up.
13. It is doubtful if the United States knows how much US Dollar is in circulation in the world. Its very poor security feature also makes it easy to forge.
14. If the United States manages it finances well the faith in the US Dollar would be justified. But the United States owes the world an estimated 14 trillion dollars, an amount which it can never hope to pay. For years the United States suffers from twin deficits. And everyday the United States Government has to borrow 1 ½ billion dollars to finance its administration.
15. On the top of this the United States banks had not been prudent. Without caring about their assets and resources they have lent huge amounts of money to high risk borrowers, particularly for the purchase of houses. The earnings of the banks were based on the expected interest on these loans.
16. To securitize the loans they were bundled up and offered to insurance companies. It was thought that the risk would be taken care of by the insurance companies. The mortgage companies also acquired these loans.
17. What brought down the banks, insurance companies and the mortgage companies was the huge total amount of the loans. They run into hundreds of billions. When the risky non-performing loans became bigger than the good ones and the collaterals have no buyers the banks could not recover the loans. The insurance companies were also unable to pay the banks because of the huge sums involved. Neither could the mortgage companies.
18. The main reason why all these things happen to the United States is because the introduction of numerous high return financial instruments had diverted investments from the real business of producing goods and services to investments in these financial instruments, which include risky loans, secured debts, collateral debt obligations, swaps, derivatives etc etc. Most people don’t even know what they are.
19. The free market also contributed much to the financial crisis. The theory is that markets can regulate themselves. When prices go down because of oversupply, production would be reduced and prices would recover. Governments should leave the markets alone.
20. But markets are about making money, maximising profits. The greedy soon found that shortages and oversupplies can be artificially created and manipulated. By creating an artificial shortage the prices would go up and the seller can make a high profit. When an oversupply situation is created by repeated selling, prices would fall. At that stage the goods could be bought and delivered to the buyers when prices were high, through yet another artificially created shortage.
21. That was what happened when currencies were traded.
22. Seeing what has happened to the United States and Europe should we carry out reforms of governance to enable all the systems and practices in those countries to be freely applied in our countries, in Asia. Although traditionally Asia would follow Europe, should we stick to this tradition, the Asian culture even though if may bring disaster to us.
23. I think we should think very carefully. Opening borders can result in the crisis of the United States and Europe assailing our countries. Yet we still need to deal with these powerful economies.
24. I am not competent to suggest the reforms needed in the circumstances. Asian countries have a need to make adjustments to the realities of the globalised world. We cannot isolate ourselves. In fact our growth had depended on the wealth of the Americans and the Europeans providing us with good markets.
25. If we allow them to go under or we do something that would destroy the economies of these countries we would lose the lucrative market. And we would also lose a source of capital.
26. We cannot simply shut our countries to these collapsing countries in order to protect ourselves. But we can be selective in how we accommodate them based upon the role we play in relation to them and on the basis of our economy.
27. The countries of Asia which have been most affected are those which succumbed to the easy money offered by the many financial instruments created by the brilliant minds in the financial industry in America.
28. On the other hand those which are too poor to invest in these high return instruments via the hedge funds or directly are not much affected.
29. The reforms of governance needed must therefore be selective in character. Whatever may be the reforms, there can be no doubt that Governments must come back to regulate and to supervise. It will make the free market less free perhaps, but that is a small sacrifice to make in order to minimise the effect of this unprecedented economic meltdown.
30. Bailouts must be regulated so that they adhere to legitimate banking practice. Insurance companies and other funds, including pension funds, must be subjected to Government initiated rules and supervision so as to reduce exposure to high risk investments.
31. Inflow of foreign funds must also be overseen. One of the problems faced by unregulated investment in stock market is the massive and sudden dumping of shares when things look bad or are expected to become bad. The sudden outflow of funds will have a deleterious effect on a country’s economy.
32. Foreign holdings in any local company should be limited. This is especially so for banks and insurance companies.
33. Governments must be prepared to regulate free trade. Where necessary import duties and excise duties should be used to protect local industries.
34. Exchange rates need to be realistic. Free floats needs to be looked at with caution. Where possible fixed exchange rates may be adopted and currency trading be made illegal.
35. Whatever the policy adopted to cope with this worldwide economic crisis, reforms of governance must still be made to provide for efficient Government i.e. efficient bureaucracy. Efficient bureaucracy must mean minimal bureaucratic procedures.
36. Corruption is the bane of all countries. It cannot be totally eliminated. But it can be reduced if bureaucratic procedures are minimal and take the shortest time possible. Any delay must suggest corruption and investigations must be carried out.
37. Government requirements in order to gain approval of anything must be very clear and must be made known to the public. Where compliance is full there should be no delay in approvals.
38. Being business-friendly is necessary in order to maximise private sector contribution towards economic development. It is the duty of Governments to find out what complaints the private sector has and to remedy them.
39. Some of what has been mentioned regarding reforms of governance are not really reforms. And some of the others would be too late to prevent the effects of the financial crisis of America and Europe from hitting Asian countries. But they are necessary nevertheless. They may be able to reduce the impact and perhaps enable earlier recovery.
40. The countries of Asia will have very different problems depending on the stages of their development, their resources and how much they are hitched to the global financial systems. Those which have depended on foreign credit or have been involved in investments in foreign funds would suffer most.
41. On the other had those with large reserves in foreign currencies or have big savings may be able to reduce somewhat the impact of the crisis.
42. Whatever may be the impact of the financial crisis the judicious measures in the governance of the economy will still prove helpful. The important thing is to ignore old habits of imitating everything the rich western countries does. Asian countries must in fact initiate changes, including those to the monetary and financial systems.
43. Asians have always believed in the role of Government in regulating institutions. The world is about to view Asian practices and systems more positively. Asian countries must therefore make their voices heard. And this includes the small developing economies as well. It would be fatal for them if they allow, as in the past the rich and the powerful to devise the systems by which they must all function. In particular the banking system and practices need to be looked at from the Asian developing economies point of view and interest.
44. Governance is defined as the act, process or power of governing, As the situation surrounding government changes, there must also be changes to governance to cope with the new situation or surrounding.
45. What needs to be done may constitute reforms of governance.
46. But reforms are often constrained by the culture of the people involved. There is no doubt that Asians subscribe to different values even among themselves but more so between them and the Europeans.
47. In a Eurocentric world Asians tend to accept everything that came from the West i.e. from the Europeans as right and proper. It is difficult for Asians to reject what originates from the Europeans.
48. But that culture, that blind acceptance of the systems and ways of the Europeans must be modified, if not discarded.
49. What we are seeing today is the collapse of a very fundamental European institution, that of money and banking.
50. It is not enough to just tweak our present system of governance. It seems that we must be prepared for radical change. And Asian ideas must find a place in the development of these changes.
51. As the saying goes we have to go back to the drawing board. We have to question the system we have used for centuries. We have to consider redefining them, introduce new rules and regulations and provide for greater governance.
52. We may have to throw out the system altogether and devise a new one.
53. All these are not in our culture. But our culture must not stand in the way of necessary reforms, if it means saving our economies and our states.
Wednesday, November 26, 2008
Corporate Pirates
It's dumbfounded when you review the credit crisis in the US. AIG is in the brink of collapse, yet they have spent almost 1/2 million bucks to send their lackeys for away day, USD20 Gs for spa , USD7,000 for golf and USD150,000 on just food. At the same time, they are crying out for help to get a piece of the USD700B stimulus that was approved by Congress earlier.
On the other hand, corporate titans cringe at the idea of paying too much bonuses to their hardworking staff when their revenues sky rocket in "historic proportions" (to plagiarize Obama's description of the ailing economy). Corporate bosses spend in excess of USD20-50k per trip on their private jets on the basis of time optimization, convenience, security and efficiency (in other words, they don't like to wait in line or wait for the plane to take off). Not to mention their ridiculous pay, stock options and golden hand shakes (see my earlier notes). Don't misconstrue me. I think CEOs and Senior Management should be paid handsomely proportionately to performance, same with their working staff. However, when times are bad, it should also be proportionate. We all work for money, there's no denying that (with the exception of Buffett & Tiger Woods alike). This is when staff morale plummets seeing their big bosses perusing the latest yacht catalog while you see your colleagues being thrown out.
Obama is likely to stir the pot. He has refused lobby money profusely. He is therefore not bounded by pressure from the lobby groups. That is encouraging. The fate of the US economy will affect us and the longer it is hurting, the worse it gets for our exports & services, hence money into the country.
Meanwhile, Main Street is not happy at all. People are flabbergasted to see all their hard-earned money taxed by the Government and given back to the same people and corporations who kicked them out of their homes and took away their jobs.
Sunday, November 23, 2008
Malaysian Economy is Doing Fine?
We read everywhere in international mainstream channels of the plaguing economic horror in the horizon. Some say it will be worse than the Great Depression in the 30's. People are being retrenched in the US and Europe especially by big corporations to reduce operating expenses. Companies are finding it difficult to pay salaries. Investors are exiting to get their hard cash out of the beat up market. Confidence is running low.
In China and India, real estate value has dropped more than half. People in the US are being chased out of their house because of loan default. Airline industry will face yet another challenge with losses in the billions of dollars and will be forced to consolidate even more. Banks are being closed down in heaps in the US. The US Government is forced to pump funds into the ailing banks, lest they will cause the whole economy to collapse. No banks would mean no loans, no homes to pay, no cars to use. Detroit is asking for US25B to stay afloat. Everyone's pulling their hair out.
Somehow, Malaysia's way above everyone else. We're not worried about all this. We're far too embroiled with whether yoga is permissible for Muslims, what language we should use on road signs and whether bloggers need a code of ethics. Meanwhile, crime rate and inflation are increasing, food is becoming less affordable, projects are being shelved, demand in exports is slowly dropping.
Malays are still phobic of losing their Constitutional rights but at the same time not stepping up to the challenge. We scorn at the prosperity of the Chinese and the social imbalance but don't force our kids to learn Math and Science in English, in fear of getting behind further. We don't understand the dangers of subsidy and ask for more. At the same time, we lambast GLCs who are not performing, yet demanding huge 'social obligations' especially to Malay companies. The Penang Government wants Petronas to fund the second Penang bridge but at the same time wants petrol price to be reduced (thus increasing subsidy money from Government's coffers, although it doesn't directly impact Petronas' revenue).
We need to know what inflation is forecasted to be for the next 2 years and how this would affect the middle and low-income groups. We need to know whether the over-issued hire purchase loans for cars would impact the economy, similar to the subprime crisis in the US. We need to know how Petronas would be affected if oil price drops to pre-war price of USD25/bbl, how much this would boost MAS' income and other oil-dependent businesses. We need to know if we have strict enough regulations to avoid issuing too much debt by banks. We need to know if credit card spending and debt will be our 'subprime loan crisis'. How much of our exports are affected? If this reduces, what is the remedy? Will people lose jobs? What is our backup plan? Are we exiting from losing investments in the US?
Reading our dailes, it would seem to an average Joe that all is hunky dory. Perhaps Malaysia's economy is isolated from the rest of the world. We should be fine then!!
*(Headline in Star read: "Inflation rate lower"). If you read the article, the inflation rate went from 8.2% to 7.6% in Oct. That's very soothing to know that inflation rate dropped by 6 points!
Friday, November 21, 2008
Drilling Fluid Coordinator
Job opening at Baker Hughes Malaysia for the position of Drilling Fluid Coordinator. Required experience is 6 years in mud engineering. Primary responsibilities are coordinate operations, provide technical support for clients, prepare tender documents & manage training for engineers.
Well Operations Coordinator
Another job vacancy in Qatar with Air Energi, 6 years of experience, primary responsibility as well works/workover/intervention supervisor, responsible for slickline and E-Line ops.
Thursday, November 20, 2008
All Going South
1. Oil price has plummeted from a high USD140 per bbl to USD53 per bbl in less than 3 months. OPEC has cut down its production in view of the global economic slow down.
2. Because of the low oil price, many exploration and development work have been re-evaluated. This will cause capex reduction by operators and consequently affect service companies. The investment made in reactivating "cold" rigs and aged boats will be in vain.
3. US consumption of retail goods have declined in lieu of paying off high mortgages and credit card debts. The average household now spends close to 70% just to pay off debt. The overspending in US above its mean is a clear cut example of how capitalism and the 'invisible hand' that corrects the market have failed.
4. Detroit has failed to secure USD25B stimulus package to help the ailing auto industries. This in return further dampened market confidence and reduced the Dow Jones by another 6% last night. Japan's Nikkei lost 7% and HK lost 5.5%. Japanese exports declined by7%, the biggest in decades. Trade deficit in Japan is absolutely abnormal.
5. There are over 1.5M jobs lost over the last few months in the US. Rolls Royce has announced its job cut plan recently.
5. Property value will go south due to foreclosures in the US. Property market has always been a good indication of how healthy the market is. Except nothing less in Malaysia as well.
6. Because Asia has been prudent and learned her lesson from 98', the cash-rich Asian countries are not feeling it just yet. That doesn't mean a slow down is not in order. Already we have seen drops in traveling, hotel occupancy, retail business and such.
7. Malaysia is in a better shape, but is not out of the dog house just yet. Viable projects cannot be shelved. Projects will benefit the construction industry and attract investors. The reduction in EPF monthly contribution is not a viable option for the long run.
8. What Malaysia needs is creating value. We are merely making patches for the leaks, but the big flood will come. We have yet to have a strong second engine of growth and oil revenue is not sustainable for the next 20-30 years.
9. Space programs should be shelved for now. Archways and bullet trains can wait. Subsidies have to be reduced. Tax cut could work to reinvigorate local spending. Corporate taxes and wind fall taxes could be studied and expand to businesses shielded from the recession or enjoying subsidized fuel or electricity.
10. The RM7B is too important for a few people to decide where it goes. The National Economic Action Council and other agencies and groups should sit together and ensure that every cent in the stimulus package is put to good use. Parliament should also form a special committee to be part of it, similar to how Congress and President-Elect Obama are handling it. This committee must also include corporate chiefs, leading CEOs and senior economists, not just politicians. Malaysia is eager to know how this money is spent.
11. We need to exit from failed investments abroad (especially the ones in the US) and reorganize our foreign portfolio. It's not a bad idea to pump money into the ailing banks in the US as they will recover from this in the next 5-10 years. The banks are projected to receive at least half of the USD700B stimulus package.
12. The food industry should be monitored and ensure that recession would not hamper food production and price.
13. This is also a good time to study sustainability projects, such as power generation from waste, alternative energy generation. Cost optimization for running the Government (fed, state and local) could also be studied and implemented. Skype and video conferencing should be encouraged. Travels should be reduced unless totally necessary.
14. It's also not a bad idea to scrutinize how zakat money has been spent. An audited account should be made public, if it hasn't. Zakat money will definitely help out the poor & needy to cope with rising food prices.
15. All eyes are on Dato' Seri Najib, our soon-to-be 6th Prime Minister. This single economic challenge will, without a doubt, define his prime ministership. We should all give him our fullest support, despite political affiliation. Malaysia must remain vigil. Get productivity up and stop changing road names....
2. Because of the low oil price, many exploration and development work have been re-evaluated. This will cause capex reduction by operators and consequently affect service companies. The investment made in reactivating "cold" rigs and aged boats will be in vain.
3. US consumption of retail goods have declined in lieu of paying off high mortgages and credit card debts. The average household now spends close to 70% just to pay off debt. The overspending in US above its mean is a clear cut example of how capitalism and the 'invisible hand' that corrects the market have failed.
4. Detroit has failed to secure USD25B stimulus package to help the ailing auto industries. This in return further dampened market confidence and reduced the Dow Jones by another 6% last night. Japan's Nikkei lost 7% and HK lost 5.5%. Japanese exports declined by7%, the biggest in decades. Trade deficit in Japan is absolutely abnormal.
5. There are over 1.5M jobs lost over the last few months in the US. Rolls Royce has announced its job cut plan recently.
5. Property value will go south due to foreclosures in the US. Property market has always been a good indication of how healthy the market is. Except nothing less in Malaysia as well.
6. Because Asia has been prudent and learned her lesson from 98', the cash-rich Asian countries are not feeling it just yet. That doesn't mean a slow down is not in order. Already we have seen drops in traveling, hotel occupancy, retail business and such.
7. Malaysia is in a better shape, but is not out of the dog house just yet. Viable projects cannot be shelved. Projects will benefit the construction industry and attract investors. The reduction in EPF monthly contribution is not a viable option for the long run.
8. What Malaysia needs is creating value. We are merely making patches for the leaks, but the big flood will come. We have yet to have a strong second engine of growth and oil revenue is not sustainable for the next 20-30 years.
9. Space programs should be shelved for now. Archways and bullet trains can wait. Subsidies have to be reduced. Tax cut could work to reinvigorate local spending. Corporate taxes and wind fall taxes could be studied and expand to businesses shielded from the recession or enjoying subsidized fuel or electricity.
10. The RM7B is too important for a few people to decide where it goes. The National Economic Action Council and other agencies and groups should sit together and ensure that every cent in the stimulus package is put to good use. Parliament should also form a special committee to be part of it, similar to how Congress and President-Elect Obama are handling it. This committee must also include corporate chiefs, leading CEOs and senior economists, not just politicians. Malaysia is eager to know how this money is spent.
11. We need to exit from failed investments abroad (especially the ones in the US) and reorganize our foreign portfolio. It's not a bad idea to pump money into the ailing banks in the US as they will recover from this in the next 5-10 years. The banks are projected to receive at least half of the USD700B stimulus package.
12. The food industry should be monitored and ensure that recession would not hamper food production and price.
13. This is also a good time to study sustainability projects, such as power generation from waste, alternative energy generation. Cost optimization for running the Government (fed, state and local) could also be studied and implemented. Skype and video conferencing should be encouraged. Travels should be reduced unless totally necessary.
14. It's also not a bad idea to scrutinize how zakat money has been spent. An audited account should be made public, if it hasn't. Zakat money will definitely help out the poor & needy to cope with rising food prices.
15. All eyes are on Dato' Seri Najib, our soon-to-be 6th Prime Minister. This single economic challenge will, without a doubt, define his prime ministership. We should all give him our fullest support, despite political affiliation. Malaysia must remain vigil. Get productivity up and stop changing road names....
Sunday, November 16, 2008
Young Voters
UMNO and especially the new UMNO Youth Chief will be expected to get things going by the time inauguration is complete. The new task: to woo 2,000,000 new young voters for the next general election. This will be the clincher whether Barisan Nasional remains in power or gets displaced by Anwar Ibrahim's Pakatan Rakyat.
It is widely known that Pakatan Rakyat fronts young leaders in the last general election and their gamble worked as planned (or perhaps by shear luck). Whether it was utter disgust of Barisan Nasional or strong support for Pakatan Rakyat, clearly the young voters heavily influenced by the internet have rejected Barisan Nasional. Even an amateur who made a famous video recording became a Yang Berhormat. BN was nearly wiped out in Wilayah, Setiawangsa was almost lost. I have yet to see massive efforts to embrace the young voters.
The backbone of Barisan Nasional is UMNO. UMNO Youth is effectivley responsible to woo these new voters. Youngsters everywhere are watching the UMNO Youth contest closely. Who becomes the next UMNO Youth Chief and what he does for the rest of the term will strongly determine where those 2 million votes would go to.
1. Young voters are better trained to reason and rationalize facts and figures, whether from mainstream media, internet or other periodicals and books. The main issues they care about are cost of living in the city, crime rate, public transportation network and reinvigorating the local economy. They are not happy when silly explanations given to them. They want hard facts and they expect progress, excellent service and prompt response from YBs. Internal issues should be dealt swiftly and accordingly to avoid Pakatan Rakyat from exploiting it. Dato' Seri Najib must be stern and decisive.
2. The membership process into political parties must be revamped or BN will face a further reduction in support in the next general election. It's always important to increase membership and renew the party with young blood. The party should be an efficient factory to produce future machinery, party workers, leaders and supporters. It's also an effective way to make the bad apples the minority in the party, not the majority. Unfortunately, bright young professionals get exasperated when their membership application take months to process. Some forms are conveniently 'misplaced'. It is unfortunate when UMNO members feel they are threatened when they see more competent people trying to join the party.
3. Pakatan Rakyat will continue to field young professionals and corporate figures in the urban area and attract the young voters to them. Barisan Nasional must front more credible candidates and not re-activate retired veterans. Politicians who have been stagnant and not delivering solid results should be cut loose. Dato' Seri Najib must recognize that the choice of candidate is extremely crucial in the next general election given the extent of the damage in the last one.
4. The more rampant discussion among youngsters is that the depth of quality leadership has seemed to be depleted. The normal comment from youngsters is "tak de orang lain ke??". Even Tan Sri Sanusi Junid had admitted earlier that UMNO has failed to train her youngsters for future transitions (pelapis). Let's emphasize quality here, not quantity. We have heaps of young leaders in UMNO Youth out there but I really don't think the general population of young Malaysian adults look up to them (the good ones are usually unknown to the general public unless you are a keen follower of local politics). Point 2 would address this issue.
Young leaders find it exasperating to be promoted in UMNO as seniority and experience still play a major role for ascension.
5. Rebranding of UMNO is in order, as mentioned earlier by DS Najib. Effective rebranding could only work with more capable faces in UMNO and Barisan Nasional, not those caught with money at airports, can't even speak in English and don't have time to visit their Divisions because they're busy. Rebranding could be done through social programs and sporting events, not just programs to cater for UMNO members.
6. For young people not in urban area, they would be more interested in tertiary education, career exposures and business opportunities. Unemployment is still increasing due to lack of skills. These issues must be addressed. UMNO should organize for career fairs, business forums and create opportunities for young entrepreneurs (not just cronies). Results must be shown.
7. Embracing mat rempits is acceptable but not to glorify them, strictly to indoctrinate discipline and work ethics with job offers as rewards (or a boot camp for delinquents), not to give media publicity. Future program must be carefully thought through and scrutinized to avoid another backfire.
8. Campaigning for SPR registration should commence immediately, not 2 months before the general election.
9. The internet media must not be underestimated again. Issues must be addressed and clarified better. Press secretaries to Ministers must be able to setup blogs and explain issues on behalf of their bosses regularly, not busy looking for projects.
If BN uses the same strategy, it will get the same result. That's inevitable. However, UMNO is a gigantic machinery. It will adhere to traditions and execute the way they've been doing business for the last 60-odd years. Changes will come but not dramatically as we want. We just hope it's not too late.
My earlier notes on young voters:
Extensive work ahead
What can we do
It is widely known that Pakatan Rakyat fronts young leaders in the last general election and their gamble worked as planned (or perhaps by shear luck). Whether it was utter disgust of Barisan Nasional or strong support for Pakatan Rakyat, clearly the young voters heavily influenced by the internet have rejected Barisan Nasional. Even an amateur who made a famous video recording became a Yang Berhormat. BN was nearly wiped out in Wilayah, Setiawangsa was almost lost. I have yet to see massive efforts to embrace the young voters.
The backbone of Barisan Nasional is UMNO. UMNO Youth is effectivley responsible to woo these new voters. Youngsters everywhere are watching the UMNO Youth contest closely. Who becomes the next UMNO Youth Chief and what he does for the rest of the term will strongly determine where those 2 million votes would go to.
1. Young voters are better trained to reason and rationalize facts and figures, whether from mainstream media, internet or other periodicals and books. The main issues they care about are cost of living in the city, crime rate, public transportation network and reinvigorating the local economy. They are not happy when silly explanations given to them. They want hard facts and they expect progress, excellent service and prompt response from YBs. Internal issues should be dealt swiftly and accordingly to avoid Pakatan Rakyat from exploiting it. Dato' Seri Najib must be stern and decisive.
2. The membership process into political parties must be revamped or BN will face a further reduction in support in the next general election. It's always important to increase membership and renew the party with young blood. The party should be an efficient factory to produce future machinery, party workers, leaders and supporters. It's also an effective way to make the bad apples the minority in the party, not the majority. Unfortunately, bright young professionals get exasperated when their membership application take months to process. Some forms are conveniently 'misplaced'. It is unfortunate when UMNO members feel they are threatened when they see more competent people trying to join the party.
3. Pakatan Rakyat will continue to field young professionals and corporate figures in the urban area and attract the young voters to them. Barisan Nasional must front more credible candidates and not re-activate retired veterans. Politicians who have been stagnant and not delivering solid results should be cut loose. Dato' Seri Najib must recognize that the choice of candidate is extremely crucial in the next general election given the extent of the damage in the last one.
4. The more rampant discussion among youngsters is that the depth of quality leadership has seemed to be depleted. The normal comment from youngsters is "tak de orang lain ke??". Even Tan Sri Sanusi Junid had admitted earlier that UMNO has failed to train her youngsters for future transitions (pelapis). Let's emphasize quality here, not quantity. We have heaps of young leaders in UMNO Youth out there but I really don't think the general population of young Malaysian adults look up to them (the good ones are usually unknown to the general public unless you are a keen follower of local politics). Point 2 would address this issue.
Young leaders find it exasperating to be promoted in UMNO as seniority and experience still play a major role for ascension.
5. Rebranding of UMNO is in order, as mentioned earlier by DS Najib. Effective rebranding could only work with more capable faces in UMNO and Barisan Nasional, not those caught with money at airports, can't even speak in English and don't have time to visit their Divisions because they're busy. Rebranding could be done through social programs and sporting events, not just programs to cater for UMNO members.
6. For young people not in urban area, they would be more interested in tertiary education, career exposures and business opportunities. Unemployment is still increasing due to lack of skills. These issues must be addressed. UMNO should organize for career fairs, business forums and create opportunities for young entrepreneurs (not just cronies). Results must be shown.
7. Embracing mat rempits is acceptable but not to glorify them, strictly to indoctrinate discipline and work ethics with job offers as rewards (or a boot camp for delinquents), not to give media publicity. Future program must be carefully thought through and scrutinized to avoid another backfire.
8. Campaigning for SPR registration should commence immediately, not 2 months before the general election.
9. The internet media must not be underestimated again. Issues must be addressed and clarified better. Press secretaries to Ministers must be able to setup blogs and explain issues on behalf of their bosses regularly, not busy looking for projects.
If BN uses the same strategy, it will get the same result. That's inevitable. However, UMNO is a gigantic machinery. It will adhere to traditions and execute the way they've been doing business for the last 60-odd years. Changes will come but not dramatically as we want. We just hope it's not too late.
My earlier notes on young voters:
Extensive work ahead
What can we do
Saturday, November 15, 2008
Komen a.fauzi dalam chedet.com : Peralihan Kuasa (untuk renungan)
Ini kali pertama saya memyuarakan pendapat saya ke alam siber. Peringatan: Undi anda adalah rahsia.
PRU ke-12 bukanlah kali pertama saya mengundi, tetapi itulah kali pertama saya bertindak seperti perenggan 10. Di kalangan keluarga, tidak seorang pun yg mengetahuinya. Buat pengetahuan semua, kedua-dua ibubapa saya adalah peraih undi untuk BN pada pilihanraya lepas. Mereka bukan orang kuat atau berjawatan pun. Cuma mereka sayangkan UMNO.
"Payung orang Melayu", kata mereka. Saya bukanlah orang yang aktif berpolitik, lantang menyuarakan pendapat dsbg.. saya hanya org "kebanyakan".
Ketika di petak undi, saya terfikir, "Betulkah tindakan saya?.. adakah saya sorang saja yang berfikir dan bertindak begini?". Tetapi ayat "kebanyakan" itu sahaja sudah cukup menerangkan sifat dan keadaannya. BANYAK org buat begitu pada pilihanraya lepas.
Tetapi betapa kecewanya, mesej yang kami sampaikan tak mendapat perhatian yang sewajarnya. Malah lebih teruk, kami dilabel sebagai "pensabotaj".
Pada saya, saya hanya menggunakan hak saya sebagai seorang warganegara. Ahli UMNO mesti pangkah BN ke, kalau pemimpinnya menjahanamkan agama, bangsa dan negara? Bayangkan pula ibubapa saya yang seikhlas hati dan seumur hidup menyumbang kepada UMNO dan BN selama ini.
Saya berdoa agar Tun dikurniakan kesihatan dan kesejahteraan untuk terus memberi "buah fikiran" dan "penjelasan yang bijaksana" demi negara bertuah ini.
Wassalam
PRU ke-12 bukanlah kali pertama saya mengundi, tetapi itulah kali pertama saya bertindak seperti perenggan 10. Di kalangan keluarga, tidak seorang pun yg mengetahuinya. Buat pengetahuan semua, kedua-dua ibubapa saya adalah peraih undi untuk BN pada pilihanraya lepas. Mereka bukan orang kuat atau berjawatan pun. Cuma mereka sayangkan UMNO.
"Payung orang Melayu", kata mereka. Saya bukanlah orang yang aktif berpolitik, lantang menyuarakan pendapat dsbg.. saya hanya org "kebanyakan".
Ketika di petak undi, saya terfikir, "Betulkah tindakan saya?.. adakah saya sorang saja yang berfikir dan bertindak begini?". Tetapi ayat "kebanyakan" itu sahaja sudah cukup menerangkan sifat dan keadaannya. BANYAK org buat begitu pada pilihanraya lepas.
Tetapi betapa kecewanya, mesej yang kami sampaikan tak mendapat perhatian yang sewajarnya. Malah lebih teruk, kami dilabel sebagai "pensabotaj".
Pada saya, saya hanya menggunakan hak saya sebagai seorang warganegara. Ahli UMNO mesti pangkah BN ke, kalau pemimpinnya menjahanamkan agama, bangsa dan negara? Bayangkan pula ibubapa saya yang seikhlas hati dan seumur hidup menyumbang kepada UMNO dan BN selama ini.
Saya berdoa agar Tun dikurniakan kesihatan dan kesejahteraan untuk terus memberi "buah fikiran" dan "penjelasan yang bijaksana" demi negara bertuah ini.
Wassalam
Tuesday, November 11, 2008
Evaluating our future Deputy Prime Minister (and potentially Malaysia's 7th Prime Minister) Part 1
Update 1 (13/11): Tun Mahathir's comment
Tan Sri Muhammad Muhammad Taib, 62, has received enough nominations last weekend to contest for the post of Deputy President of UMNO. He is currently the Minister of Rural Development and was a big surprise to be reactivated by Prime Minister DS Pak Lah into the cabinet after his long slumber from active duty in the government. Muhd Taib was detained in Brisbane some 12 years ago for failing to declare currencies equivalent to A$1.26M in cash, which he carried in his duffel bag. The source of money was never questioned.
Muhd Taib had clearly breached the Australian customs law. He was later cleared by the Australian court due to his poor command of the English language, therefore not being able to interpret the omnipresent declaration signs at the airport. So he claimed. Had he been a nobody from Malaysia, he would have been in jail. The Star reported on 31 Dec 96 that TSM2T would continue serving as MB after the international humiliation! He was then asked to resign. The good Tan Sri claimed that the cash was for a property acquisition and but was never proved.
His blog is pretty regular. Nothing exciting except the normal rhetoric of strengthening UMNO, fighting for Malay rights and eradicating poverty (which should be a straight-forward cause for any Malay politician). Initially aiming for the post of Vice President on the basis of strengthening the party. When interviewed on national TV, he said "saya dah banyak kali ambil SPM, bagilah peluang ambil STPM pula". Very inspiring......
"Kalau mahu dilihat rekod terdahulu saya pernah memenangi jawatan itu dalam tiga pemilihan pada 1993, 1996 dan 2000 sebelum tewas pada 2004. Saya menawar diri kerana mahu membantu memperkasakan parti untuk berdepan dengan cabaran baru".
Now aiming for the post of Deputy President. Perhaps in his mind he could achieve more as Deputy President, in the name of "stabilizing the party". He should first remember the causes for the instability in the party. Can't he help stabilize the party by just being a senior member of the party? Isn't it time to make way for younger blood? I reckon he'd be a great asset for Mubarak.
"Tidak timbul soal saya akan menarik diri kerana niat dan tujuan saya menawar diri adalah untuk membantu menstabil dan memperkasakan parti. Oleh itu saya menyeru pimpinan bahagian akan bersedia memberi sokongan kepada saya agar ahli berpeluang untuk memilih pemimpin secara lebih terbuka".
On his cabinet portfolio, he had earlier proposed a digital mapping system for rural development. This proposed system would catalog existing infrastructure and status of amenities. Other than that, there has not been anything refreshing or exciting in the ministry.
"Bagi saya peta ini amat berguna untuk kita terus merancang pembangunan di kawasan luar Bandar. Hanya dengan melihat peta sesebuah kampong atau pekan dan melalui penanda warna yang kita berikan, pihak kementerian atau pegawai yang bertanggongjawab akan mudah mengetahui status sesebuah kampong tersebut".
He is currently a state assemblymen, so if he wins, a by-election is in order. Only a Member of Parliament can table bills and legislation at Parliament and the Deputy Prime Minister must be able to do so in the absence of the Prime Minister. Which Selangor MP is willing to make way for Muhd Taib?
Not to mention the fact that he has been UMNO Information Chief and should be jointly held responsible for the disastrous general election. Barisan Nasional got slaughtered in the internet media. We should have seen it coming and countered effectively. There was no countermeasure for the alternative media. Clearly the Information Chief should be on top of this. Muhd Taib was superfluously off the ball in his prediction and preparation going into the general election.
"Umno is intact. There is no crisis in the party".
"There may be a 10% swing in votes but it’s manageable".
"It’s always “hot” but we win each time. In Kelantan in the last election, we had internal problems and so we lost just a few seats. It was not because of PAS’ strength that we lost. We could have won. This time around Umno is very intact. I have a feeling we can win in Kelantan".
Given his age, I doubt that DS Najib would consider him as a successor should he win. Because of his tainted record in Brisbane, it'd be open season on BN candidates in the next general election (again). You really wonder why divisions would nominate such a candidate (ahhh, perhaps there is other form of motivation in the equation). Do you really think he is fit to be the next Deputy Prime Minister?
To be continued......
Tan Sri Muhammad Muhammad Taib, 62, has received enough nominations last weekend to contest for the post of Deputy President of UMNO. He is currently the Minister of Rural Development and was a big surprise to be reactivated by Prime Minister DS Pak Lah into the cabinet after his long slumber from active duty in the government. Muhd Taib was detained in Brisbane some 12 years ago for failing to declare currencies equivalent to A$1.26M in cash, which he carried in his duffel bag. The source of money was never questioned.
Muhd Taib had clearly breached the Australian customs law. He was later cleared by the Australian court due to his poor command of the English language, therefore not being able to interpret the omnipresent declaration signs at the airport. So he claimed. Had he been a nobody from Malaysia, he would have been in jail. The Star reported on 31 Dec 96 that TSM2T would continue serving as MB after the international humiliation! He was then asked to resign. The good Tan Sri claimed that the cash was for a property acquisition and but was never proved.
His blog is pretty regular. Nothing exciting except the normal rhetoric of strengthening UMNO, fighting for Malay rights and eradicating poverty (which should be a straight-forward cause for any Malay politician). Initially aiming for the post of Vice President on the basis of strengthening the party. When interviewed on national TV, he said "saya dah banyak kali ambil SPM, bagilah peluang ambil STPM pula". Very inspiring......
"Kalau mahu dilihat rekod terdahulu saya pernah memenangi jawatan itu dalam tiga pemilihan pada 1993, 1996 dan 2000 sebelum tewas pada 2004. Saya menawar diri kerana mahu membantu memperkasakan parti untuk berdepan dengan cabaran baru".
Now aiming for the post of Deputy President. Perhaps in his mind he could achieve more as Deputy President, in the name of "stabilizing the party". He should first remember the causes for the instability in the party. Can't he help stabilize the party by just being a senior member of the party? Isn't it time to make way for younger blood? I reckon he'd be a great asset for Mubarak.
"Tidak timbul soal saya akan menarik diri kerana niat dan tujuan saya menawar diri adalah untuk membantu menstabil dan memperkasakan parti. Oleh itu saya menyeru pimpinan bahagian akan bersedia memberi sokongan kepada saya agar ahli berpeluang untuk memilih pemimpin secara lebih terbuka".
On his cabinet portfolio, he had earlier proposed a digital mapping system for rural development. This proposed system would catalog existing infrastructure and status of amenities. Other than that, there has not been anything refreshing or exciting in the ministry.
"Bagi saya peta ini amat berguna untuk kita terus merancang pembangunan di kawasan luar Bandar. Hanya dengan melihat peta sesebuah kampong atau pekan dan melalui penanda warna yang kita berikan, pihak kementerian atau pegawai yang bertanggongjawab akan mudah mengetahui status sesebuah kampong tersebut".
He is currently a state assemblymen, so if he wins, a by-election is in order. Only a Member of Parliament can table bills and legislation at Parliament and the Deputy Prime Minister must be able to do so in the absence of the Prime Minister. Which Selangor MP is willing to make way for Muhd Taib?
Not to mention the fact that he has been UMNO Information Chief and should be jointly held responsible for the disastrous general election. Barisan Nasional got slaughtered in the internet media. We should have seen it coming and countered effectively. There was no countermeasure for the alternative media. Clearly the Information Chief should be on top of this. Muhd Taib was superfluously off the ball in his prediction and preparation going into the general election.
"Umno is intact. There is no crisis in the party".
"There may be a 10% swing in votes but it’s manageable".
"It’s always “hot” but we win each time. In Kelantan in the last election, we had internal problems and so we lost just a few seats. It was not because of PAS’ strength that we lost. We could have won. This time around Umno is very intact. I have a feeling we can win in Kelantan".
Given his age, I doubt that DS Najib would consider him as a successor should he win. Because of his tainted record in Brisbane, it'd be open season on BN candidates in the next general election (again). You really wonder why divisions would nominate such a candidate (ahhh, perhaps there is other form of motivation in the equation). Do you really think he is fit to be the next Deputy Prime Minister?
To be continued......
Saturday, November 8, 2008
Tahniah Dato' Seri Najib! Now.... the hard part (Part 3)
DSNR also has to crack the whip as Chairman of Barisan Nasional. Component parties should act like partners and cease making statements contradicting the philosophies and agreed stand of the coalition. Every component leader should respect and safeguard each race's rights in the constitution. Stern actions should be taken for those who disobey. Is disciplinary action in order for SAPP and MCA (some UMNO leaders are at fault too)? We'll see. DSNR should also make his stand crystal clear (and he has made a clear position about the NEP). If he's for it, there shouldn't be any more discussion about it, especially from coalition partners. End of story. Crack the whip Dato' Seri, please.
Reforming UMNO and Barisan Nasional is no easy task. It doesn't even come close in the vicinity of a difficult task. It is extremely challenging but not impossible. This is a coalition in need of serious revamping and rebranding after the huge reduction in parliamentary and state seats that BN used to dominate.
On money politics, we all know what all politicians think of it. Now ACA and the UMNO disciplinary board are working together to nip this problem in the bud. However, the systemic problem remains. The number of delegates for any national or division are too small and easily influenced with promises of cash and positions. It's a 'manageable' number of delegates for contenders with serious cash and moolah. Increasing this number by 3-4 folds would help alleviate the problem for now.
This pandemic problem within UMNO is commonplace. The lack of quality members within the party is also obvious. It is widely known that the 'other side' boasts memberships of professionals, business leaders (should not include cronies who get projects easily from their political friends and end up selling them off to the chinese. It's especially true for those with zero knowledge of the business) and corporate figures with definitely better background. No disrespect intended for members who might be offended with this statement, but it's pretty obvious ("ukurlah baju di badan sendiri" (aspiration should match capability)). Clearly, a sudden injection of bodies would create a shock in the system. It has to be done in stages, which has to be guided and monitored by the party President himself.
We need to be realistic as these individuals won't be swayed with a mere RM500 to vote for joe black, for example. We might scorn the amount, but to some people, that's easy money so to speak. Unfortunately, because of the membership process, it takes months to get a form processed (assuming you're not considered a threat to incumbents within the division). A clear turn off for aspiring candidates and potential asset for the party.
Scrapping the quota system and opening up the race for any position could help curb the problem (if TS Muhyiddin wins uncontested this weekend, it should be his first agenda come March 09). Having a debate between contenders is also healthy to discuss issues and create awareness of the candidate's agenda and aim. The settings and audience can be catered for members first before we are ready to open it up publicly.
There is no doubt money is required for campaigning especially for national-level posts, travel expenses, staff salary, 'duit rokok', etcetera, etcetera. Here's what's funny. In the US, candidates conduct fund raising and the money is channelled for campaigning. It's the opposite here. Candidates normally end up forking out his own money most of the time. Perhaps it is time to make fund raising legal within certain threshold and stop making election a 'business' in the party.
Can we also scrap all the singing in meetings (except for the national anthem)?
Part 2
Reforming UMNO and Barisan Nasional is no easy task. It doesn't even come close in the vicinity of a difficult task. It is extremely challenging but not impossible. This is a coalition in need of serious revamping and rebranding after the huge reduction in parliamentary and state seats that BN used to dominate.
On money politics, we all know what all politicians think of it. Now ACA and the UMNO disciplinary board are working together to nip this problem in the bud. However, the systemic problem remains. The number of delegates for any national or division are too small and easily influenced with promises of cash and positions. It's a 'manageable' number of delegates for contenders with serious cash and moolah. Increasing this number by 3-4 folds would help alleviate the problem for now.
This pandemic problem within UMNO is commonplace. The lack of quality members within the party is also obvious. It is widely known that the 'other side' boasts memberships of professionals, business leaders (should not include cronies who get projects easily from their political friends and end up selling them off to the chinese. It's especially true for those with zero knowledge of the business) and corporate figures with definitely better background. No disrespect intended for members who might be offended with this statement, but it's pretty obvious ("ukurlah baju di badan sendiri" (aspiration should match capability)). Clearly, a sudden injection of bodies would create a shock in the system. It has to be done in stages, which has to be guided and monitored by the party President himself.
We need to be realistic as these individuals won't be swayed with a mere RM500 to vote for joe black, for example. We might scorn the amount, but to some people, that's easy money so to speak. Unfortunately, because of the membership process, it takes months to get a form processed (assuming you're not considered a threat to incumbents within the division). A clear turn off for aspiring candidates and potential asset for the party.
Scrapping the quota system and opening up the race for any position could help curb the problem (if TS Muhyiddin wins uncontested this weekend, it should be his first agenda come March 09). Having a debate between contenders is also healthy to discuss issues and create awareness of the candidate's agenda and aim. The settings and audience can be catered for members first before we are ready to open it up publicly.
There is no doubt money is required for campaigning especially for national-level posts, travel expenses, staff salary, 'duit rokok', etcetera, etcetera. Here's what's funny. In the US, candidates conduct fund raising and the money is channelled for campaigning. It's the opposite here. Candidates normally end up forking out his own money most of the time. Perhaps it is time to make fund raising legal within certain threshold and stop making election a 'business' in the party.
Can we also scrap all the singing in meetings (except for the national anthem)?
Part 2
Friday, November 7, 2008
Tahniah Dato' Seri Najib! Now.... the hard part (Part 2)
The first agenda in order as Prime Minister is to setup a more effective and vibrant cabinet, filled with very, very capable Ministers. The post of ministers should not be looked at as 'rewards' of loyalty to component party members. It should be given with the highest consideration of competence and abilities. The Finance portfolio would surely be closely guarded by the PM himself due to the urgency and heightened importance.
I would suggest streamlining some overlapping ministries to increase efficiency and consequently reduce operating costs. In particular, MOSTI and the Ministry of Energy, Water and Communications should be somehow restructured and clustered to specific functionalities and not overlap with each other. While MDec is under MOSTI's stable, MCMC is under the other ministry (perhaps a Ministry of Energy and Ministry of Technology. The US has only 15 cabinet Secretaries governing 260million people). Same with Ministry of Agriculture and Ministry of Plantations and Commodities. The Federal Territory Ministry should be removed since it creates duplication with the City Hall, Putrajaya and Labuan Corporation. Do we really need both a Cultural Ministry and Tourism? Ministry of Work should be headed and managed by highly competent engineers from the main sectors and disciplines to cease sub-par construction of major projects in this country.
The workforce in the government of more than a 1M-strong workers should be categorized in 3 groups, the top 20, the middle 70 and the bottom 10. The bottom 10 should be cut off from the system and compensated with VSS to increase competitiveness. I reckon this would cause a storm of protests from Government officers, Cuepacs and staff but personally, that would be the remedy to increase competitiveness, integrity and efficiency in the civil service. You either get a mediocre government by being nice to everyone or a more efficient and rewarding one by imposing higher standards. Of course, the high performers should be rewarded accordingly. Similar to a basketball team or other sports, the star players would be playing most of the time, the mediocre would go in and out and the under-performers would be bench warmers or water boys. That should apply in the work place! If this looks really harsh, try 20-75-5. Cutting some excess fat would not hurt.
Having said that, the package for employment should be continually looked at and improved to attract better talents into the massive machinery. This will directly improve how DSNR's policies are carried out. Teachers, soldiers and policemen included.
To be continued.....
(Part 1)
I would suggest streamlining some overlapping ministries to increase efficiency and consequently reduce operating costs. In particular, MOSTI and the Ministry of Energy, Water and Communications should be somehow restructured and clustered to specific functionalities and not overlap with each other. While MDec is under MOSTI's stable, MCMC is under the other ministry (perhaps a Ministry of Energy and Ministry of Technology. The US has only 15 cabinet Secretaries governing 260million people). Same with Ministry of Agriculture and Ministry of Plantations and Commodities. The Federal Territory Ministry should be removed since it creates duplication with the City Hall, Putrajaya and Labuan Corporation. Do we really need both a Cultural Ministry and Tourism? Ministry of Work should be headed and managed by highly competent engineers from the main sectors and disciplines to cease sub-par construction of major projects in this country.
The workforce in the government of more than a 1M-strong workers should be categorized in 3 groups, the top 20, the middle 70 and the bottom 10. The bottom 10 should be cut off from the system and compensated with VSS to increase competitiveness. I reckon this would cause a storm of protests from Government officers, Cuepacs and staff but personally, that would be the remedy to increase competitiveness, integrity and efficiency in the civil service. You either get a mediocre government by being nice to everyone or a more efficient and rewarding one by imposing higher standards. Of course, the high performers should be rewarded accordingly. Similar to a basketball team or other sports, the star players would be playing most of the time, the mediocre would go in and out and the under-performers would be bench warmers or water boys. That should apply in the work place! If this looks really harsh, try 20-75-5. Cutting some excess fat would not hurt.
Having said that, the package for employment should be continually looked at and improved to attract better talents into the massive machinery. This will directly improve how DSNR's policies are carried out. Teachers, soldiers and policemen included.
To be continued.....
(Part 1)
Thursday, November 6, 2008
Nasihat Dr. Mahathir kepada Obama
KUALA LUMPUR 5 Nov. – Bekas Perdana Menteri, Tun Dr. Mahathir Mohamad berkata, Barack Obama akan dapat berperanan sebagai Presiden Amerika Syarikat (AS) yang baik sekiranya beliau memahami negara lain.
Katanya, Presiden AS sekarang, George W. Bush dilihat tidak mengetahui apa-apa mengenai negara lain manakala kebanyakan Presiden terdahulu juga tidak mempunyai pengetahuan yang mencukupi mengenai negara-negara Timur.
Sehubungan itu tegasnya, Obama perlu mengemas kini dirinya mengenai apa yang berlaku di rantau ini bukan sekadar mengenai China, Jepun dan Korea bahkan negara di Asia Tenggara.
“Untuk Presiden baru, saya rasa dia akan melakukannya dengan baik jika memahami negara-negara lain.
“Kami menyedari, Bush tidak tahu apa-apa mengenai dunia lain dan ramai Presiden AS juga tidak mempunyai pengetahuan yang cukup mengenai negara Timur dalam segala tindakan mereka,” katanya.
Beliau mengulas kemenangan Obama dalam rancangan The World Watches yang disiarkan secara langsung oleh stesen televisyen Al Jazeera hari ini.
Katanya, Presiden AS sekarang, George W. Bush dilihat tidak mengetahui apa-apa mengenai negara lain manakala kebanyakan Presiden terdahulu juga tidak mempunyai pengetahuan yang mencukupi mengenai negara-negara Timur.
Sehubungan itu tegasnya, Obama perlu mengemas kini dirinya mengenai apa yang berlaku di rantau ini bukan sekadar mengenai China, Jepun dan Korea bahkan negara di Asia Tenggara.
“Untuk Presiden baru, saya rasa dia akan melakukannya dengan baik jika memahami negara-negara lain.
“Kami menyedari, Bush tidak tahu apa-apa mengenai dunia lain dan ramai Presiden AS juga tidak mempunyai pengetahuan yang cukup mengenai negara Timur dalam segala tindakan mereka,” katanya.
Beliau mengulas kemenangan Obama dalam rancangan The World Watches yang disiarkan secara langsung oleh stesen televisyen Al Jazeera hari ini.
Talisman Energy Latest Earnings
Talisman Energy Reports Record Net Income of $1.4 Billion, Cash Flow Increases 48% to $1.7 Billion, Production From Continuing Operations Up 10% NOV 4, 2008 - 05:15 ET CALGARY, ALBERTA--(Marketwire - Nov. 4, 2008) - Talisman Energy Inc. (TSX:TLM) (NYSE:TLM) reported its operating and financial results for the third quarter of 2008.
- Cash flow(1) during the quarter was $1.7 billion, an increase of 48% from a year ago and relatively unchanged from the second quarter. Cash flow from continuing operations(1) was also $1.7 billion.
- Net income was a record $1.4 billion, an increase of 305% from a year earlier, driven by increased netbacks, mark-to-market gains on derivative contracts and stock-based compensation recovery.
- Earnings from continuing operations(1) were $731 million, up 189% compared to the third quarter in 2007, driven by increased volumes and higher netbacks.
- Production averaged 443,000 boe/d, 1% above the third quarter of 2007, despite the sale of approximately 40,000 boe/d of non-core assets over the past year. Production was also 3% above the previous quarter.
- Production from continuing operations averaged 435,000 boe/d, 10% above the same quarter last year and 4% higher than the second quarter of 2008.
"In Malaysia/Vietnam, growth projects are being progressed, with Northern Fields first gas delivered on time during the quarter, and although start up of Song Doc has been slightly delayed, we expect first oil in the next few weeks. Northern Fields first oil remains on track for the first quarter of 2009. Early development plans for the Hai Su Trang and Hai Su Den fields are also moving toward approval. First production from Rev and Yme in Norway remains on track for the announced dates".
"Northern Fields drilling operations and progress on the main Bunga Orkid-A processing and accommodation platform are on schedule for first oil from the Northern Fields Development at the end of first quarter 2009. Three of five initial gas wells were completed in mid-October and each are currently producing approximately 70 mmcf/d gross raw gas (20 mmcf/d net sales gas), in line with pre-drill expectations. The remaining two wells will be tested and completed in mid-December. Development drilling continues, with about one-quarter of the planned 50 well program completed to date".
>> The coming trend for drilling programs in the near future would be deep water reservoirs, tight shale with enormous reserves, re-entry programs and especially huge reservoirs in exotic locations with harsh environment. Watch for upcoming developments in South America particularly in Brazil to begin ramping up. The commodity would be relatively more stable now that the Wall Street vultures have mostly given up their papers. Expect more tertiary recovery ops in brown fields.
- Cash flow(1) during the quarter was $1.7 billion, an increase of 48% from a year ago and relatively unchanged from the second quarter. Cash flow from continuing operations(1) was also $1.7 billion.
- Net income was a record $1.4 billion, an increase of 305% from a year earlier, driven by increased netbacks, mark-to-market gains on derivative contracts and stock-based compensation recovery.
- Earnings from continuing operations(1) were $731 million, up 189% compared to the third quarter in 2007, driven by increased volumes and higher netbacks.
- Production averaged 443,000 boe/d, 1% above the third quarter of 2007, despite the sale of approximately 40,000 boe/d of non-core assets over the past year. Production was also 3% above the previous quarter.
- Production from continuing operations averaged 435,000 boe/d, 10% above the same quarter last year and 4% higher than the second quarter of 2008.
"In Malaysia/Vietnam, growth projects are being progressed, with Northern Fields first gas delivered on time during the quarter, and although start up of Song Doc has been slightly delayed, we expect first oil in the next few weeks. Northern Fields first oil remains on track for the first quarter of 2009. Early development plans for the Hai Su Trang and Hai Su Den fields are also moving toward approval. First production from Rev and Yme in Norway remains on track for the announced dates".
"Northern Fields drilling operations and progress on the main Bunga Orkid-A processing and accommodation platform are on schedule for first oil from the Northern Fields Development at the end of first quarter 2009. Three of five initial gas wells were completed in mid-October and each are currently producing approximately 70 mmcf/d gross raw gas (20 mmcf/d net sales gas), in line with pre-drill expectations. The remaining two wells will be tested and completed in mid-December. Development drilling continues, with about one-quarter of the planned 50 well program completed to date".
>> The coming trend for drilling programs in the near future would be deep water reservoirs, tight shale with enormous reserves, re-entry programs and especially huge reservoirs in exotic locations with harsh environment. Watch for upcoming developments in South America particularly in Brazil to begin ramping up. The commodity would be relatively more stable now that the Wall Street vultures have mostly given up their papers. Expect more tertiary recovery ops in brown fields.
Wednesday, November 5, 2008
And the first African-American US President is now official
Obama wins by 189 electoral votes (338 to 149, 51% to 49% popular votes). The interesting point is that it is still a tight race in terms of popular votes, similar to the last election. Obama is just ahead by a few million votes. This demonstrates a significant fault line in American politics (at 12:30pm Malaysian time, Obama has 42.4M popular votes vs McCain's 39.7M). 62% of voters are interested in a massive US economic and financial restructuring, which is Senator Obama (now President)'s bullet point during the intense campaigning. To do this, President Obama needs to put in strict market regulations and reduce spending in Iraq amounting to about USD20B a month. His second presidential agenda is reducing oil dependency from the Middle East.
Florida was a massive win for Obama (27 electoral votes). Note that he won by a slim 100,000 popular votes only. North Carolina (17 electoral votes) was won by a mere 22,000 popular votes!!!! Ohio (20 electoral votes) was won by 90,000 popular. Very, very close election.
McCain got beat in his own state of Arizona, winning only 54% of the votes compared to Obama's 61 in Illinois.
The South showed an expected strong support for the Republicans.
Well done Mr President!
pic taken from CNN.com
Tahniah Dato' Seri Najib! Now.... the hard part.
First of all, congratulations are in order for Dato' Seri Najib Tun Razak for getting enough nominations to win the post of UMNO president without contest. Now that it's over, Dato' Seri Najib (DSNR) has probably begun planting strategies and getting prepared mentally for the post of UMNO president and Malaysia's 6th Prime Minister.
The first thing on the list would be of no surprise, which is to spur the economy due to the massive global financial system meltdown. Capital injections are making headlines in the US and Europe, including rescue packages from IMF for those in need of some moolah. I reckon more money should be channeled to small and medium enterprises to reinvigorate the retail business in the country. I disagree with the proposal to reduce the EPF monthly reduction so that people would have more money in their pocket. Reducing your bird's nest for retirement is not the answer, especially when that money is not even enough! For the poor and the needy, I wonder where we could get data of zakat money distribution in KL and Selangor. Selangor earlier reported of a collection close to a couple of hundred million ringgit. I wonder if zakat collection centers have some sort of an audited report of their yearly distribution. These funds should be able to help out (there is a distinct difference between the poor and the needy, both of which are entitled for zakat).
Urban folks in KL and Penang have not forgotten about the plans to expand the LRT network, increase the number of coaches and feeder buses. This should be implemented immediately and covered in main stream media extensively. Otherwise, this would be the silver bullet in the next general election. The savings from reduced subsidies were planned to be channeled here. The funds utilized in this area should be transparent so that it won't create a ruckus in Parliament and in public forums.
The next agenda should be energy. Malaysia is set to become a net-importer of oil in a couple of years and a clear blue print and implementation of strategies should be set in stone. Whether it's nuclear, biodiesel, electric cars or wind farms, the public should be kept informed (this is a more substantial cover story, rather than covering stories of MPs swearing and calling each other monkeys, who would want to read about that???). Subsidies are not the way to go and it would deprive the Government from channeling that money for better usage. Subsidies blatantly create complacency and lack of competition (isn't that what MCA wants!).
To be continued...
The first thing on the list would be of no surprise, which is to spur the economy due to the massive global financial system meltdown. Capital injections are making headlines in the US and Europe, including rescue packages from IMF for those in need of some moolah. I reckon more money should be channeled to small and medium enterprises to reinvigorate the retail business in the country. I disagree with the proposal to reduce the EPF monthly reduction so that people would have more money in their pocket. Reducing your bird's nest for retirement is not the answer, especially when that money is not even enough! For the poor and the needy, I wonder where we could get data of zakat money distribution in KL and Selangor. Selangor earlier reported of a collection close to a couple of hundred million ringgit. I wonder if zakat collection centers have some sort of an audited report of their yearly distribution. These funds should be able to help out (there is a distinct difference between the poor and the needy, both of which are entitled for zakat).
Urban folks in KL and Penang have not forgotten about the plans to expand the LRT network, increase the number of coaches and feeder buses. This should be implemented immediately and covered in main stream media extensively. Otherwise, this would be the silver bullet in the next general election. The savings from reduced subsidies were planned to be channeled here. The funds utilized in this area should be transparent so that it won't create a ruckus in Parliament and in public forums.
The next agenda should be energy. Malaysia is set to become a net-importer of oil in a couple of years and a clear blue print and implementation of strategies should be set in stone. Whether it's nuclear, biodiesel, electric cars or wind farms, the public should be kept informed (this is a more substantial cover story, rather than covering stories of MPs swearing and calling each other monkeys, who would want to read about that???). Subsidies are not the way to go and it would deprive the Government from channeling that money for better usage. Subsidies blatantly create complacency and lack of competition (isn't that what MCA wants!).
To be continued...
Monday, November 3, 2008
RESCUE PLAN BY US FEDERAL RESERVE
Over the last few days, the US Federal Reserve has opened USD 120 billion (30 x 4) of new swap lines of credit for another quartet of central banks: Mexico, Brazil, South Korea and Singapore. This brings the number of such lines to 14. Similar credit lines have been issued to the central banks of Australia, New Zealand, Switzerland, Denmark, Sweden, Norway and other members of the G7, of which three -- Germany, France and Italy -- are within the Euro. Ten of the swap lines now amount to USD 255 billion, while those with the European Central Bank, the Bank of England, the Bank of Japan and the Swiss National Bank are technically unlimited. Global credit markets froze up in late September after the failure of investment bank Lehman Brothers, limiting private sources of dollar funding. The US Fed move comes as central banks worldwide continue to fight systemic weakness in credit and capital markets. Such weakness has undermined economic prospects and led many to fear a long and protracted global recession.
Under the swap arrangement the Federal Reserve accepts other nation's currencies and some assets in exchange for the dollar until 30th April 2009 as most of the investors, not wanting to take any risk, have withdrawn their money from most countries. This reinforces the role of the central pillar envisaged at Bretton Woods for the US and its currency. To avoid the foreign currency crisis from spreading to other nations the Fed is making sure that the fundamentally sound and well managed magic circle economies have ready access to the US dollar as the fear of getting its money back from these well established central banks is deemed to be negligible. These deals are meant to confirm that the 14 magic circle nations are in relatively good shape compared with emerging nations that are struggling with a shortage of dollar liquidity and the global credit crunch. By virtue of these US Fed swap lines within the magic circle, the US government has in theory virtually guaranteed that these countries will not have to face the prospect of sovereign default anytime soon. Three examples follow -- two in the magic circle -- and one outside:
1. Within the magic circle, South Korea is in dire need of dollars and will use the USD 30bn credit line as its banks and companies are finding it difficult to secure enough dollars to service their debts and pay for business activities. Increased dollar demand has put downward pressure on the local currency, with the Korean Won losing around 34 per cent so far this year. South Korea has said its foreign-currency reserves of nearly USD 240 billion, ranking sixth in the world, were sufficient to avert a repeat of the 1997-1998 financial crisis. However, there are lingering doubts about the ability of the country's banks to service their maturing short-term debt.
2. Within the magic circle, Brazil is a key BRIC and the largest economy in Latin America. It has been troubled by the crisis on its stock market and currency forcing the central bank to inject USD 7.7 billion into the domestic money market to counter the credit squeeze, and is standing by with nearly another USD 3 billion if necessary. Last week it also intervened three times to sell an unspecified amount of dollars from its reserve pile of USD 207 billion to reverse the slide of its currency, the Brazilian Real which has fallen by 30 per cent this year.
3. Absent from the magic circle is Argentina, which is now facing its worst crisis since the 2001-2002 devaluation that saw the country stop paying USD 100 billion in foreign debt -- the largest sovereign debt default in history. On Friday, Standard & Poor's cut the country's low credit ratings even further amid turmoil in the capital markets after the country moved to take over the country's private pension funds. The foreign currency debt was lowered to B-, ie, junk territory. The Argentine Peso has dropped off to six year lows, and credit-default swaps, which measure the cost of insurance against default, have widened to an exorbitant spread. Argentine bonds are trading at levels not seen since 2002. The lack of an extension of a similar swap line from the US Fed -- which would allow the central bank to exchange its currency for dollars in order to help companies pay back dollar borrowings amid a shortage of dollars -- is telling. Given that there has been a sharp depreciation in the currency the general sense is that they are pursuing policies that do not seem to be sustainable in the medium- or long-term.
For the moment, the Federal Reserve's massive expansion of US dollar swaps with other central banks seems to be working to ease liquidity pressures in global markets. This sea of dollars seems to be meeting safe-haven demand for the currency across the world, helping pull down the three-month London InterBank Operational Rate(LIBOR) for US dollars to 3.19 percent on Thursday, from a damagingly high 4.82 percent earlier this month. These spreads remain at levels that are well above normal and other measures of stress, such as the Volatility index, have risen even further. However, some experts say it will be difficult for the magic circle governments to prevent an outflow of dollars if the global credit crisis persists and foreign investors continue to question the prospects for their domestic economies. For the moment, the risk of default on foreign debts has been eased significantly, but the important issue is to erase doubts about their economic fundamentals, including the soundness of the banking sector. One of the key questions emerging at present in this regard is as follows: can the magic circle countries' public finances shoulder these new responsibilities? Will those countries, for example like Belgium (285%) and Switzerland (260%) with short term banking liabilities significantly exceeding GDP (Proportional percentage) be able to bail themselves out? Iceland (211%) could not. It is important that these economies be set up for a soft-landing by gradually removing bubbles in the financial sector and their other economic engines, rather than inviting a bigger risk by maintaining or inflating them with stimulus packages. The Fed has also said it welcomes the International Monetary Fund's decision to establish a short-term liquidity facility for emerging-market countries, adding it supports the IMF's role in helping countries address and resolve their ongoing economic and financial difficulties.
DK Matai
Chairman, ATCA Open
Under the swap arrangement the Federal Reserve accepts other nation's currencies and some assets in exchange for the dollar until 30th April 2009 as most of the investors, not wanting to take any risk, have withdrawn their money from most countries. This reinforces the role of the central pillar envisaged at Bretton Woods for the US and its currency. To avoid the foreign currency crisis from spreading to other nations the Fed is making sure that the fundamentally sound and well managed magic circle economies have ready access to the US dollar as the fear of getting its money back from these well established central banks is deemed to be negligible. These deals are meant to confirm that the 14 magic circle nations are in relatively good shape compared with emerging nations that are struggling with a shortage of dollar liquidity and the global credit crunch. By virtue of these US Fed swap lines within the magic circle, the US government has in theory virtually guaranteed that these countries will not have to face the prospect of sovereign default anytime soon. Three examples follow -- two in the magic circle -- and one outside:
1. Within the magic circle, South Korea is in dire need of dollars and will use the USD 30bn credit line as its banks and companies are finding it difficult to secure enough dollars to service their debts and pay for business activities. Increased dollar demand has put downward pressure on the local currency, with the Korean Won losing around 34 per cent so far this year. South Korea has said its foreign-currency reserves of nearly USD 240 billion, ranking sixth in the world, were sufficient to avert a repeat of the 1997-1998 financial crisis. However, there are lingering doubts about the ability of the country's banks to service their maturing short-term debt.
2. Within the magic circle, Brazil is a key BRIC and the largest economy in Latin America. It has been troubled by the crisis on its stock market and currency forcing the central bank to inject USD 7.7 billion into the domestic money market to counter the credit squeeze, and is standing by with nearly another USD 3 billion if necessary. Last week it also intervened three times to sell an unspecified amount of dollars from its reserve pile of USD 207 billion to reverse the slide of its currency, the Brazilian Real which has fallen by 30 per cent this year.
3. Absent from the magic circle is Argentina, which is now facing its worst crisis since the 2001-2002 devaluation that saw the country stop paying USD 100 billion in foreign debt -- the largest sovereign debt default in history. On Friday, Standard & Poor's cut the country's low credit ratings even further amid turmoil in the capital markets after the country moved to take over the country's private pension funds. The foreign currency debt was lowered to B-, ie, junk territory. The Argentine Peso has dropped off to six year lows, and credit-default swaps, which measure the cost of insurance against default, have widened to an exorbitant spread. Argentine bonds are trading at levels not seen since 2002. The lack of an extension of a similar swap line from the US Fed -- which would allow the central bank to exchange its currency for dollars in order to help companies pay back dollar borrowings amid a shortage of dollars -- is telling. Given that there has been a sharp depreciation in the currency the general sense is that they are pursuing policies that do not seem to be sustainable in the medium- or long-term.
For the moment, the Federal Reserve's massive expansion of US dollar swaps with other central banks seems to be working to ease liquidity pressures in global markets. This sea of dollars seems to be meeting safe-haven demand for the currency across the world, helping pull down the three-month London InterBank Operational Rate(LIBOR) for US dollars to 3.19 percent on Thursday, from a damagingly high 4.82 percent earlier this month. These spreads remain at levels that are well above normal and other measures of stress, such as the Volatility index, have risen even further. However, some experts say it will be difficult for the magic circle governments to prevent an outflow of dollars if the global credit crisis persists and foreign investors continue to question the prospects for their domestic economies. For the moment, the risk of default on foreign debts has been eased significantly, but the important issue is to erase doubts about their economic fundamentals, including the soundness of the banking sector. One of the key questions emerging at present in this regard is as follows: can the magic circle countries' public finances shoulder these new responsibilities? Will those countries, for example like Belgium (285%) and Switzerland (260%) with short term banking liabilities significantly exceeding GDP (Proportional percentage) be able to bail themselves out? Iceland (211%) could not. It is important that these economies be set up for a soft-landing by gradually removing bubbles in the financial sector and their other economic engines, rather than inviting a bigger risk by maintaining or inflating them with stimulus packages. The Fed has also said it welcomes the International Monetary Fund's decision to establish a short-term liquidity facility for emerging-market countries, adding it supports the IMF's role in helping countries address and resolve their ongoing economic and financial difficulties.
DK Matai
Chairman, ATCA Open
Subscribe to:
Posts (Atom)
Posts
