Archive for March, 2009


THE GLOBAL ECONOMIC CRISIS AND THE FUTURE OF ASEAN
(Keynote Address by Anwar Ibrahim at Chulalongkorn University, March 30th 2009)

When I first uttered the unutterable in Hong Kong sometime late last year that Hayek is history I was then bombarded with accusations of having turned my back on Adam Smith. Not too long later however, we heard reluctant acquiescence from liberal institutions that the free-market principles that guided American financial development would no longer count as biblical injunctions.

In the presence of such an erudite audience today, let me take the liberty to indulge further in the discourse. Just to be clear, I make no claim to pioneering new ideas but suffice to say that I am a mere commentator having had some experience in managing an economy which was also going through one of the worst financial turmoil in Asia. We need to remember only the boom-and-bust cycles articulated by the 19th century economists such as John Stuart Mill or Alfred Marshall, before we get carried away with the modern orthodoxy, which depicts financial markets as effective, stable, and self-correcting mechanisms.

The advocates of spontaneous order which had hitherto attained the level of religious orthodoxy having rammed free market strictures about self correction and deregulation are now conspicuously silent. What went wrong?

True, the reaction against command economies of the Orwellian kind as exemplified by the Soviet Union and other Communist countries in the past was well founded. But was there really a need to subscribe to a theory where absolute reliance is placed on the law of chaos? The issue here is not whether the free market system and the pricing mechanism based on competition is viable; but in stubbornly holding on to the view that markets are benign, championed by the likes of Hayek and a distinguished pedigree of Nobel laureates such as Milton Friedman and his Chicago protégés, with Alan Greenspan as the turn of the century poster boy, Wall Street enjoyed more than two decades of financial deregulation. During this time, we witnessed the unfolding of Enron, Worldcom, and so on and the Sarbanes-Oxley laws dealt only piecemeal. But what was left unchecked was the proliferation of the weapons of financial mass destruction —such as mortgage-backed securities and collateral debt obligations. In place of the earlier institutional giants, we now have on parade the largest financial institutions in the world, brought down to their knees.

The unprecedented government bail outs nailed the lie to the dictum that the State should not interfere in the free market processes. Hayek’s devotional mantra that the invisible hand will eventually work to rectify things has vaporized into mere Harry Potter hocus pocus.

The stimulus packages in America, the UK and some other EU countries are so massive that even die hard Keynesians are spoofed. It is true that the Keynesians believe that pump priming itself with the necessary checks and balances is indeed the most effective way of powering economies out of their recessionary corners but the concern we have is the unfettered adoption of polices of reducing the cost of funds to near zero, while government goes on a spending spree on even more borrowed money. The Federal Reserve and other central banks buy up Treasury bonds and other government papers in order to give that much needed shot in the arm for the economy still waiting for the invisible hand to appear. They call this “quantitative easing” but everyone knows this is just a euphemism for borrowing one’s way out of debt.

It remains to be seen whether this phase of irrational exuberance in borrowing is different from the Keynesian prescriptions to counter the 1930s Great Depression. To be sure, the once unassailable doctrine of spontaneous order has been dealt a body blow that is destined to consign it to the dustbin of economic history. That America is opting to bail out its banks and insurance companies at arbitrary values rather than allowing the law of free market supply and demand to take its course is therefore a damning indictment of its fundamental economic principles.

What then is the real lesson to be learned from this crisis?

Is this a systemic failure arising from the unbridled practice of free-market principles or is it a case of the prophetic truth coming home to roost, that is, he who sows the wind must reap the whirlwind?

One of the strongest arguments today is that deregulation has led to the current fiasco. To go further some have made the case that regulations were always there but the regulators slept on the job. Some finger pointing here is inevitable. Alan Greenspan has already been whipped. Fannie Mae and Freddie Mac, they say, is a classic case of regulators failing to detect the cheating by accountants, something that would have been easily uncovered by a bit of fraud specific forensic accounting. It would have required just a bit more diligence perhaps but certainly it was no rocket science.

The underlying causes however must go back to the question of easy money which remained the substratum of the American political economy for the last three decades. This came on the back of a new religion of financial alchemy spawned from the fertile womb of Wall Street, a religion using sophisticated financial reengineering calculated to transform debt into wealth. This was the philosopher’s stone by which the largest economy in the world by sheer consumption alone was able to not just eke out an existence but to thrive and prosper.

To my mind, this financial maelstrom undermines not only the economic foundation but the political and moral substructure of Western capitalism. We still believe that market economies which stand solely on the feet of homo economicus are doomed to fail because the dictates of a humane economy impel us to consider ideas about right and wrong, social justice and the dignity of man. Shakespeare’s dictum against making “the orphan pine while the oppressor feeds” is a timely reminder. It must jolt us back to the issues involving the great divide between general welfare and distributive justice.

We don’t say this perched on any kind of moral high ground. It was a similar kind of profligate spending that had got us into the 1997 Asian financial crisis. And we lectured and hectored. But unlike the scenario in the U.S. there was certainly greater oversight in Asia and more regulatory control. Corruption and abuse of power featured more prominently in the case of Asia. In fact, there was a case that rogue institutions were working hand in glove with lawyers and accountants to maneuver their way through the regulatory process.

In Asia it was a case of over legislation providing a labyrinthine cover for shady and questionable transactions. And the rich were bailed out at the expense of the poor. This is where the question of accountability and transparency reigns high.

To be sure the lessons of moral hazard were relentlessly knocked on our heads in the wake of the Asian crisis and at the risk of sounding repetitive, let me say again that the massive bail outs that we are seeing today in America are nothing if not classic instances of moral hazard going bezerk, made all the more ironic considering that we are looking at the bastion of free market capitalism.

Perhaps it’s time we took another look at the factor-price equalization (FPE) theorem. We know that it was through exuberantly inflated prices of goods and services that made it possible for Americans to carry on indulging in overconsumption while the rest of the world particularly Asia had to settle for much less. As those trained in economics and international trade will tell you, this mirage will be shattered eventually as the FPE theorem sets in to bring into equilibrium the relative prices of these goods and services across the world. This may have been a tad too theoretical in the distant past but with the pace of globalization and international finance and free trade flowing the way it is now, the impact can be real.

And it is one of the great ironies that this poster nation of liberal democracy and free market capitalism is so heavily indebted to the poster nation of autocracy and command economy. Indeed it is well known that China is the biggest funder of the US federal deficit. Other Asian nations as well as Middle Eastern countries not renowned for open and liberal governments are also substantial investors.

There is the dynamics of economic self-interest and geopolitical imperatives. The question is still how long will Asian and Arab investors continue to prop up these prices?

Yes, the world has had a good five years or so of robust economic growth spearheaded no doubt by the emerging economies, but the policy shift in Asia is already under way from monetary tightening to monetary loosening. The East Asian juggernauts are moving fast with the billions in spending package proposed by Taiwan, Japan and China together with de rigueur tax cuts and interest rates lowering.

While at the start of the financial implosion, there were still brave echoes of decoupling immunity shielding Asian countries, any suggestions today would have been dismissed by the bloodbath that went on in the Asian equity markets. While it is true that generally banks in Asia are still holding up, the fact is that our economies are too closely intertwined with those in the locus of the financial meltdown. The upside of globalization that allowed export-oriented countries to thrive has a very sharp downside as well so a recession on one side of the world spreads quickly to the other. The 9% reduction in global trade predicted for this year is rendering a crushing blow to once vibrant and thriving economies.

The myth that if your exports dry up for the U.S. market there is always the emerging economies as a buyer of last resort is all but shattered. All domestic demand indices until only several weeks ago were falling. Property prices are heading south in India and construction figures in China show the steepest ever decline particularly for Shenzhen.

Growth through productivity and competitiveness remains our pathway to prosperity. It has liberated millions from the scourge of poverty and destitution and enabled our people to enjoy freedom and decent living conditions.

The temptation to explode the government bureaucracy during recessionary times must be avoided. The weight of a bloated and inefficient bureaucracy can do more harm in the long term. Money invested in entrepreneurship and stimulating the private sector will generate more value for the economy in the short and long term.

Adequate measures for ensuring good governance are essential. Government spending guided by a policy that shows little transparency in the award of contracts is a clear warning sign of mismanagement of the economy.

More importantly the spending packages that have been announced should focus on projects that are good for business and good for people. A social agenda during recessionary times would ensure that critical institutions such as public health and education are not neglected. Infrastructure development should seek growth areas in industry, public housing and strengthening transportation and communication between urban and rural areas. Fiscal intervention could then find areas to increase demand through tax cuts and incentives to hire workers and enhance their human capital through training and development.

For us in Asia, history has proven that growth through increased productivity and competitiveness is the only path to achieve prosperity. It has liberated millions from the scourge of poverty and destitution and it has enabled our people to enjoy freedom and decent living conditions. In region dominated by the economic powers of China and India the 600 million people living within Asean represent a formidable foundation upon which to regain prosperity.

It is true that our interests have never been more closely intertwined. As Asean nations buy and sell more from and to each other, as our economies become even more intimately linked by investment flows and multinational operations, and as our national borders become more porous, our fortunes will become even more inseparable and indivisible. A determined effort will be necessary to crystallize these bilateral ties into a firm and coherent pact.

A cohesive Asean regional cooperation remains an elusive goal and history has taught us that when push comes to shove Asean nations will tend towards unilateralism. This should be avoided at all costs. We would agree with Prime Minister Abhiset’s view that “As the financial crisis deepens, the world will look towards our region for action and for confidence.”

There is a greater calling that we face during these uncertain times. A looming recession and the risk of social upheaval make for a volatile political situation. Growth oriented policies that ignore the social dimension will spurn greater disenchantment. The overall societal objectives of distributive justice and fairness must not be ignored as we identify a way forward. With millions at risk of sinking into poverty as jobs become scarce the steps taken to revive ailing economies must not overlook the needs of the poor and marginalized.

We are likely to witness some leaders revive the mantra of Asian Values – that in the pursuit of economic growth the rights of the individual are peripheral. Unpopular governments would certainly need a pretext upon which they can silence dissent against policies that fail to address the problem of unemployment, poor public infrastructure and lack of quality social services.

On the contrary a prosperous Asia is merely an illusion if material wealth is subsumed in a sea of repression and denial of basic human rights. True prosperity must be accompanied by with political empowerment of the ordinary citizen. Fundamental freedoms such as the freedom from hunger, freedom from fear and exploitation, and the freedom to peacefully practice one’s religious beliefs are so basic for the growth of a truly humane society.

The growth of civil society and renewed economic prosperity will not be possible without regional stability. The political resolve to formulate an Asean pact with a mechanism to institutionalize agreements on trade, finance and human rights is necessary. This has proven no easy task but is still attainable. We must establish strong interdependibility, economic and political. The nurturing of democracy and civil society, in tandem with economic growth — for democracy and growth are not mutually exclusive — is our best guarantee of regional peace and security for future generations.

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Interesting developments, yesterday Pak Lah asked the media not to pester him on the date for the transition of power. Pak Lah urged the media not to keep asking him to reveal the date he will step down as Prime Minister. Pak Lah asked the people to be patient as the handing over of power to his deputy Datuk Seri Najib Tun Razak would take its course. Pak Lah said “Just wait for that. Don’t ask me to say anything now. All these things will happen. The transition will take its course.”

So, it looks like till to date, there is no actual handover date yet to Najib Tun Razak, although, Pak Lah told the Umno Assembly that he is going to see the Agong on April 2nd.

Yesterday in an interview with BBC in London, Tun Dr Mahathir said that Najib is a good administrator but has got WEAKNESSES. Wow! this is a killer punch by Dr Mahathir. Looks like Dr Mahathir knows something about Najib which we don’t. In so saying, I believe Dr Mahathir has killed Najib. Even Dr Mahathir is favouring openly Tan Sri Muhyiddin Yassin to be the next PM instead of Najib.

What is happening here to our poor Najib? Is he ever going to be PM? I think not.

I strongly believe that our Agong too may not agree with Najib taking over from Pak Lah. I’m sure Agong too is aware that Najib has failed to dispel all the swirling rumours of his alleged links to the murder of Mongolian beauty Altantuya Shaariibuu @ Aminah. Our Agung will not accept Najib’s appointment as PM until Najib has satisfactorily cleared all the lingering doubts about the murder of Altantuya Shaariibuu @ Aminah.

Wonder what must be going thro Najib and Rosmah’s mind now.  Must be full of anxiety and palpitations for Najib and Rosmah. So near and yet so far! I think this is KARMA and Najib is dead man walking.


Umno vice-president Datuk Seri Hishammuddin Tun Hussein’s rewrites history when he said at the Umno general assembly that the process of  our independence and later developments were forged by “Umno and our Malay Rulers and no one else”.

Well done Hishammudin! You always have the habit of speaking the truth and nothing but the truth.

Remember Hisham, I don’t know if you were born before 1957, it was Tunku Abdul Rahman who led a three-man Alliance delegation comprising Tunku, Najib’s father and Tan Sri T.H. Tan from the MCA to England to hold talks with the colonial authority.

Later on or before 1957, Tunku Abdul Rahman also led an Alliance delegation comprising MCA and MIC to London to hold independence talks with the British.

STOP REWRITING HISTORY! STOP OPENING YOUR BIG MOUTH!


At least 200 schoolchildren in Britain, some as young as 13, have been identified as potential terrorists, prompting drastic new tactics to prevent teenagers becoming attracted to Islamic extremist ideology.

Sir Norman Bettison, Britain’s most senior officer in charge of terror prevention, revealed the number, which had leapt from 10 children identified by June 2008. “Channel project” had intervened in the cases of at least 200 children who were thought to be at risk of extremism, since it began 18 months ago. 

Inayat Bunglawala of the Muslim Council of Britain agreed that in recent years youngsters have been attracted by terrorist propaganda emanating from al-Qaeda-inspired groups.

In recent years many British Muslim youngsters have been lured and seduced by terrorist propaganda emanating from al-Qa’ida-inspired groups.

The British government now realise that it has a role to play in making sure that Muslim youngsters who have been seduced by al-Qa’ida-inspired groups must be made to realise that the whole thing is seen for what it is i.e a nihilistic one which offers no hope, only death and destruction.


Recession? Not in Holmby Hills, the most exclusive neighbourhood of Los Angeles. A 5,250 square metre mansion has just gone on the market there for $150 million, the highest price asked for a U.S. home.

The French chateau-style construction has a silver storage room, a wine tasting room, a screening room, a bowling alley, a wine cellar, a 1,600 square metre attic that includes a barbers and a beauty salon, and a gift-wrapping room.

But it is unclear how many rooms there are — 100, or 123? The house belongs to the widow of TV producer Aaron Spelling, the brain behind such TV hits as Charlie’s Angels and Dynasty.

The mansion, built in 1991, also has tennis courts, pool and spa, waterfalls, a reflection pool, an 18th century-style garden, a rooftop garden and a citrus orchard.


Malaysians with Indian ancestry are so stuck in the racial crap created and carved by Samy Vellu for the last 30 years. This is a 30 years screw up of the mind and I hold Samy Vellu responsible for this.

Why have to follow the racist Umno style of thinking? This racist thinking has caused Malaysians of Indian ancestry to suffer from complexity problems. Until and unless Malaysians with Indian ancestry get rid of the racial feelings and resolve to fight for the struggles and reforms as a Malaysian they will surely be left behind in the wider context even come 2050.

Let face it, those who embrace the Malaysian identity will rise with the rest of the Malaysians. This country belongs to all Malaysians and not to any one particular community.

This is a beautiful country and lets not screw it and divide it by race.

We have such a rich ancestry and diversity which we should bring together and make Malaysia a unique nation a melting pot of this diversity.

I myself will never, yes NEVER, ever join any racial based political party which thrives on ethnicity. I and my family are color blind and I thank my parents for having instilled this in me. I even married a Sabahan Bumiputra and created 2 kids who don’t even know their race. My children are very much colour blind like me. I instilled this on them and I am proud of this.

Now lets look at the Bukit Selambau situation. Abang Anwar gave the seat to a Malaysian of Indian ancestry to represent Pakatan Rakyat. What else do they want? Why create all the fuss about the candidate? Why cant they see the big picture? Just because MGR their idol is not selected to stand, the idiots make it difficult for the person selected by the party. What kind of thinking is this? That is why I say their heads are all screwed. Perhaps Abang Anwar should give the seat back to a Malay candidate since it’s a Malay majority seat and in the last election the last PKR candidate was a Malay. Afterall, this Arumugam fellow who won the seat the last time because of the disqualification of the PKR candidate was with the help of Malay votes.

See here what PET has got to say about Malaysians of Indian ancestry and he calls them BODOH PUNYA INDIA and I agree with him fully.

Here goes….

Okay, now over to the Indians. There are three by-elections coming soon — one each in Perak, Kedah and Sarawak.
While there appears to be no problems thus far in Perak and Sarawak, it looks like Kedah is going to face problems even before Nomination Day. And the problem is as follows. The Indians are not happy with Pakatan Rakyat’s choice of candidate and they will probably boycott or sabotage the by-election if they don’t get their way.
Okay, I have no problems with that. After all, most of the Indians, the majority of them, are all ex-MIC supporters anyway. This means they have kepala otak MIC. They think like MIC and throw tantrums like MIC and demand this and that like MIC. That is to be expected.
But what is unsettling is the way the Indians constantly talk about Indian this and Indian that. Every time these ex-MIC Indians open their mouths it must be about Indian rights, Indian interests, hak India, kepentingan India, and whatnot. These Indians are just like the Umno chaps, minus the little rusted curved knives. These ex-MIC Indians and the Umnochaps are like pinang dibelah dua, or, as the English would say, like two peas in a pod.

I know that people from Italy are called Italians, people from Germany are called Germans, people from Russia are called Russians, people from China are called Chinese, people from India are called Indians, and so on and so forth. Therefore, it goes without saying that people from Malaysia are called Malaysians. But those Malaysians whose forefathers came to Malaysia from India in the 1850s to around 1920 or so still want to be known as Indians even though they and their parents were all born in Malaysia.

Read my lips, very slowly. Those born in Malaysia are Malaysians while those born in India are Indians. You can’t be born in Malaysia and yet still be Indians. Get it? Or must I repeat that?

Enough of all this Indian this and Indian that! Who the shit cares about Indian rights and Indian interests? We are fighting for Malaysian rights and Malaysian interests. It is Ketuanan Rakyat. Not KetuananIndia just like Ketuanan Melayu a la Umno.

I once had an argument with a Hindraf supporter and he tried to impress upon me that the Indians need to be represented and they need an Indian to represent them. I asked this chap whether he is Indian and he replied that he is. Then go back to India, I told him. Indians live in India. Malaysians live in Malaysia. He then corrected himself and said that he is a Malaysian.

In that case, I replied, why do you want an Indian to represent you? Can’t I, a Malay, be your representative? Why must it be an Indian? I too can represent the Indians and serve the Indians.

This Hindraf chap then asked me how I would feel if an Indian represented me. Considering I am Malay, can I accept an Indian Prime Minister? Of course I can, I replied. In fact, I accepted an Indian Prime Minister for 22 years. The only thing is I never saw him as an Indian or even addressed him as an Indian. I just addressed him as Datuk Seri (now Tun) Dr Mahathir Mohamad.

I am not the problem, I told this chap. You are. You look at things from an Indian perspective. I look at it from a Malaysian perspective. Anwar Ibrahim is half-Indian. Wan Azizah, according to Umno, is half-Chinese. I am half-Malay. Many of my very close friends and relatives are half this or half that. But we never, I repeat never, address each other or look at each other through coloured lenses. We are absolutely and thoroughly colour-blind.

I would like to pack all those who shout and scream that they are Indians into a tongkang and send them back to India where they belong. Bodoh punya India!”

 

 


 BREAKING NEWS!

UMNO POLLS

Umno’s new deputy-president Tan Sri Muhyiddin Yassin won the race to become the next DEPUTY PRIME MINISTER OF MALAYSIA.

In the race for vice-president, ZAHID HAMIDI got the highest votes and behind him, 2nd in the race is HISHAMMUDIN TUN HUSSIN ONN and third is SHAFIE APDAL. All three made it as vice-president of Umno.


  

BREAKING NEWS!

Its 10.30pm and we hear unofficial results indicating that Khairy Jamaluddin has won the Umno Youth. I don’t have the figures yet for the Umno Youth contest but hear Khairy and Mukriz were neck to neck but Khir Toyo had a bad showing.

Only the official results for the Umno Wanita has been announced so far. Shahrizat Abdul Jalil has deposed Rafidah Aziz as Umno Wanita chief. Shahrizat garnered 507 votes and poor Rafidah only managed 280 votes.


NEP_Hisham_Keris.jpg

I am with friends watching the circus at the PWTC and heard Umno Youth chief Datuk Seri Hishammuddin Hussein in action. This happens to be Hishammuddin’s final speech as Youth chief and I did not see him raising the keris this time around.

He spoke about the social contract and Bumiputera privileges and attacked those who question the social contract as provocateurs of racial tension.

Datuk Seri Anwar Ibrahim was again made the bogeyman and was accused as traitor for selling out Malay rights to the non-malays. Anwar was also accused for being manipulative and doing things “differently in front, and differently behind,”  which meant that Anwar was an ass screw-er and this drew cheers and laughter from delegates and observers.

Hisham also accused Anwar as power crazy, willing to do anything and even willing to cooperate with the enemy to deny the rights of Malays by insulting them at various forums across the world and even ready to insult the institution of Malay rulers.

Funny, Hishamuddin also said that the Feb 5 takeover of Perak was divine justice by the power of God.


No, not Mat Rempits from Malaysia, Hells Angels Bikers brawled through Australia’s largest airport on Sunday, beating one suspected gang member to death and brandishing metal poles “like swords” as they rampaged through the main domestic terminal in front of terrified travellers.

Police said a group of suspected Australian Mat Rempits was ambushed as they disembarked from an airplane. “A fight ensued, the fight moved through various parts of the terminal.” They said 15 men were involved in the violence, which rampaged from the ground floor up one level to the departures hall before most of the men fled. They said one man died from head injuries after the brawl, which appeared to bear out warnings of an impending biker war. “They came running through picking up the big metal barrier poles and swinging them like swords at each other.”