Archive for the ‘bailout’ Category


I picked up this letter written to Malaysia Today by a  chap calling himself  “SAS ( Saham  Amanah Sabah) Victim.” This is interesting subject, perhaps to me, because I have many  friends in KK who had invested a fair bit and lost their pants in this investment, after a steep fall of the SAS unit price during Yong Teck Lee’s time as Chief Minister. Till today many curse and swear Yong Teck Lee and Ambrose Lee whom they say is the “mastermind” behind the lost in their life-savings.

What happen was in 1998 there was a share swap deal between Warisan Harta Sabah Sdn Bhd of which Yong Teck Lee was Chairman and Suniwang Holdings Sdn Bhd of which Ambrose Lee was the Boss. The rational of entering into this transaction was that the Government through Warisan Harta could utilise a RM50 million fund. Yes Ringgit 50 juta. The RM50 million was to support counters in which Warisan Harta and Sabahans had investments.

As a result of the share swap deal Warisan Harta lost RM114 million. The RM114 million was lost after Warisan Harta under the chairmanship of Yong Teck Lee disposed its blue chip MISC shares in return for the acquisition of NBT shares and Sugar Bun shares. Both counters are delisted ever since. Both of these share counters  NBT and Sugarbun were connected to Suniwang which was controlled by Ambrose Lee.

A whopping RM 114 million losses in this deal for the State.

So don’t you have to have somewhat of a criminal mind to be a politician? Most politicians are devious. They’ll sell “hope” to the public and they’ll make it seem very rosy and people don’t even know that their investment will be paid for out of their hard-earned savings. These politicians act like it’s fine. Politicians have no problem telling people something’s fine when it’s not. Politicians are worse than criminals because really when you think about it all a criminal does is just steal your money… what politicians do is to lie to people. They’ll lie to you… they’ll tell you what you want to hear… it’s a good deal…plenty of money to make…State Government investment, so must be good. People don’t know people like Ambrose Lee the CEO of Public Companies has got no money and cannot give personal guarantees for 200 million dollars to get this deal fix. It will surely fail because the motive is to milk the cow dry on the expanse of the people.

So I mean aren’t politicians similar to criminals? I know there are exceptions to the rule – like Yong Teck Lee?  Don’t make me puke lah! Read below and make your opinion heard.

Birds of the feather flock together: Joseph Ambrose Lee comes to the rescue of Yong Teck Lee

By SAS Victim

For more than a decade Sabahans have forgotten about Joseph Ambrose Lee Yok Min, 52, who once boasted of himself as the new Syed Kechik of Sabah, after he failed in his scandalous schemes to take over the RM30-billion timber wealth of Yayasan Sabah.

The late Syed Kechik was the de facto Chief Minister of Sabah when he was legal adviser to the late Tun Datu Mustapha bin Datu Harun who ruled the state with an iron-fist from 1967 to 1976.

Ambrose was back in Kota Kinabalu, having made his home in Perth, on August 7 at the Sutera Harbour Resort defending his bosom buddy Yong Teck Lee, who was Sabah Chief Minister from 1996 to 1998, over the fiasco of Saham Amanah Sabah (SAS) arising from a scandalous share-swap between Warisan Harta, the Sabah government’s investment arm, and Ambrose’s Suniwang Holdings Sdn Bhd.

More than 55,000 Sabahans, most of them pensioners and low-income civil servants, lost all their life-savings when the price of the state unit trust plummeted to 17 sen from its RM1.00 unit price soon after he sealed the deal when he became Chief Minister.

At the press conference, Ambrose (that’s what his few friends and many foes call him) made a feeble attempt to defend Yong over the missing RM50 million from the share-swap which Yong has been unable to explain to Sabahans.

Ambrose stressed that he paid RM50 million in cash through Innosabah Securities, the stockbroker, to Warisan Sabah in a deal that saw him exchanging his over-priced shares of NBT and Sugar Bun for Warisan’s blue chip MISC shares.

No one has disputed this. But what has not been answered is that the money received by Warisan was never given to SSB as Yong has said. Yong was the Chief Minister and Warisan Chairman. Yet he has failed to tell Sabahans what happened to the RM50 million which he, as Warisan Chairman, received and which he never gave to SSB.

Dr Yee Moh Chai, Minister of Resource Development and Information Technology, told the assembly on August 3 that Saham Sabah Berhad (SSB) which manages the SAS has confirmed to him that it has never received the RM50 million out of the share dealings of Warisan Harta.

At the assembly, Dr Yee pointed out that it was Yong who linked the disastrous share-swap of blue chip MISC shares belonging to Warisan with shares of NBT and Sugar Bun, which were cornered speculative stocks. The swap resulted in a loss of RM114 million to Warisan.

Yong had defended the share-swap. As Warisan’s chairman, he was on record to say that “the wider policy in entering into this transaction was that the Government through Warisan Harta could utilise the RM50 million fund.”

Yong said the RM50 million was to support counters (stocks) on the then Kuala Lumpur Stock Exchange (KLSE,now Bursa) in which Warisan and the people of Sabah had investments. The true outcome, according to Dr Yee, is that as a result of the share-swap deals, Warisan Harta lost RM114 million.

Ambrose blamed Warisan for the loss because it refused to accept his offer to pay RM96 million for the difference between its purchase and market price of NBT and Sugar Bun shares which he said fell sharply because of the Asian financial crisis.

What he failed, in Ambrose’s own words, to tell the “entire populace of Sabah” was that he did not have the cash to pay RM96 million. He suggested another share-swap! Thus Warisan sued Suniwang for RM179,825,000. True enough, Suniwang folded. Warisan did not get a sen. If Ambrose had the money, would his flagship Suniwang Holdings Sdn Bhd collapse like a pack of cards?

Ambrose blamed Musa Aman, who was then Finance Minister, for rejecting again his proposal in 2007 to settle his debt of RM179,825,000 by transferring shares of Borneo Marble Corporation Sdn Bhd which he owned through proxies.

He said Warisan had entertained his proposal but the Sabah government rejected it. Warisan officials said it was true that they entertained his proposal but it did not accept it because the company was a liability.

Recently filings with the Companies Commission of Malaysia have proved this to be so. Borneo Marble was formerly known as Galmore Resources Sdn Bhd and was a fully-owned subsidiary of Suniwang Sdn Bhd which was owned by J Ambrose Sdn Bhd.

As at the end of December 2006, Borneo Marble suffered a pre-tax loss of RM108,793. There are no records of its financial filings from 2007 to 2009.

Ambrose boasted that his NBT owned 200,000 acres of timber land under Forest Management Unit which was bought by someone else.

Officials said what he failed to say was that NBT was in debt to the tune that the company was worthless and the timber land was pledged to a bank as collateral. The property was sold by the bank to recover its loan to NBT.

Ambrose had banked on the Sabah government to bail him out which it had rightly refused.

By his own admission, he has a Receiving Order of the court placed on his assets under the control of an official assignee. He has not been adjudicated a bankrupt yet.

Any chance of the Sabah government bailing him out now hinges on the remote chance of Yong Teck Lee becoming Sabah’s Chief Minister again. And why shouldn’t he? After all it was Yong’s late father, Yong Yun, who financed Ambrose’s law studies in London.


Ku Li today painted a bleak future for Malaysia under the Barisan Nasional government, saying it had squandered the nation’s oil wealth to the tune of billions of ringgit.

The former Finance Minister said Petronas’s oil profits had been used “to bail out failing companies, buy arms, build grandiose cities amidst cleared palm oil estates.” “Instead of helping eradicate poverty in the poorest states, our oil wealth came to be channeled into our political and politically-linked class,” the first Petronas chief and former Umno vice president said in a speech at the Young Corporate Malaysians Summit.

He said Petronas money had been used as a slush fund to prop up authoritarian rule, to corrupt the entire political and business elite and to erode constitutional democracy.

The Gua Musang MP told the conference that Petronas had contributed 40 percent to the national budget over the years. But such a great reliance on oil income was getting untenable, he said. “The oil that was meant to spur our transition to a more humane, educated society has instead become a narcotic that provides economic quick fixes and hollow symbols such as the Petronas Towers.”

Ku Li said the future for Malaysians looks bleak with the government seeking to broaden the tax base by introducing a goods and services tax (GST), requiring Malaysians to pay an additional tax on top of income tax. Malaysia is now caught in a middle-income trap, stuck in the pattern of easy growth from low-value-added manufacturing and component assembly and unable to make the leap to a knowledge-intensive economy, Tengku Razaleigh added.

Following is the text of his speech: In a speech I made in April this year, I spoke of where we stand in our developmental path and what I felt we must do to move forward. I need to revisit that argument in order to develop it further.

We are stagnating. The signs of a low-growth economy are all around us. Wages are stagnant and the cost of living is rising. We have not made much progress in becoming a knowledge and services based economy.

According to the World Bank, Malaysia’s share of GDP contributed by services was 46.2 percent in 1987. Ten years later, that share had grown by a mere 0.2 percent. Between 1994 and 2007, real wages grew by 2.6 percent in the domestic sector and by 2.8 percent in the export sector, which is to say, they were flat over that 13-year period.

Meanwhile, our talent scenario is an example of perverse selection at its most ruinous. We are failing to retain our own young talent, people like yourselves, let alone attract international talent to relocate here, while we have had a massive influx of unskilled foreign labour. They now make up 30 to 40 percent of our workforce.

Alone in East Asia, the number of expatriate professionals here has decreased. Alone in East Asia, private sector wage increases follow government sector increases, instead of the other way around. We are losing doctors and scientists and have become Southeast Asia’s haven for low-cost labour. I said that we are in a middle-income trap, stuck in the pattern of easy growth from low-value-added manufacturing and component assembly and unable to make the leap to a knowledge-intensive economy. Regional competitors with larger, cheaper – and dare I say – hungrier labour forces have emerged. China and India have risen as both lower cost and higher technology producers, and with giant domestic markets.

The manufacturing sector which propelled the growth we enjoyed in the 90s is being hollowed out. There is no going back, there is no staying where we are, and we do not have a map for the way forward. I am glad that the characterisation of Malaysia as being in a ‘middle-income-trap’ has been taken up by the government, and that the need for an economic story, or strategy, for Malaysia is now recognised. We stand in particular need of such a model because we are a smallish economy.

We cannot be good at everything, and we don’t have to be. We need only make some reasonable bets in identifying and developing a focused set of growth drivers. It is not difficult to see what the elements of such a growth strategy might be.

Whatever we come up with should build on our natural strengths, and our strengths include the following:

+ We are located at the crossroads of Asia, geographically and culturally, sitting alongside the most important oil route in the world.

+ We have large Muslim, Chinese and Indian populations that connect us to the three fastest growing places in the world today.

+ We have some of the largest and oldest rainforests in the world, a treasure house of bio-diversity when the greatest threat facing mankind as a whole now is ecological destruction, and the greatest technological advances are likely to come from bioscience.

+ We have the English language, a common law system, parliamentary democracy, good schools, an independent civil service and good infrastructure.

These advantages, however, are declining. Our cultural diversity is in danger of coming apart in bigotry, our rainforests are being logged out and planted over, our social and political institutions are decaying.

I have spoken at length on different occasions about the causes and consequences of institutional decline. The decline in our society, and indeed in our natural environment, originates in a decline in our basic institutions. The link between these is corruption.

The destruction of our ecosystem, for example, is made possible by corrupt officials and business people.

The uncontrolled influx of unskilled labour is a direct result of corruption. These are problems we need to be aware of before we speak glibly about coming up with new strategies and new economic models. We need to understand where we are, and how we have gone wrong, before we can set things right.

You are young, well-educated Malaysians. Many among you have left for other shores. Record numbers of Malaysians, of all races, work abroad or have emigrated. Among these are some of our best people. They sense the stagnation I described. There is a certain lack of energy, ingenuity and “hunger” in the climate of this country that young people are most sensitive to. In the globalised job market, young people instinctively leave the less simulating and creative environments for those that have a spark to them.

How did we lose our spark as a nation? We have a political economy marked by dependence on easy options and easy wealth. Like personal dependencies, these bad habits provide temporary comfort but discourage the growth of creativity and resilience.

I mentioned our dependence on low-cost foreign labour. The other dependence is something I played a part in making possible.

This is a story I want to leave with you to ponder in your deliberations today.

Our nation is blessed with a modest quantity of oil reserves. As a young nation coming to terms with this natural bounty in the early 70s, our primary thought was to conserve that oil.

That is why, when Petronas was formed, we instituted the Petroleum Development Council. Its function was to advise the prime minister on how to conserve that oil and use it judiciously for national development.

We knew our reserves would not last long. We saw our oil reserves as an unearned bounty that would provide the money for modernisation and technology. We saw our oil within a developmental perspective.

Our struggle then was to make the leap from an economy based on commodities and low-cost assembly and manufacturing to a more diverse economy based on high income jobs. Aware that we had an insufficient tax base to make the capital investments needed to make the leap, we planned to apply oil royalties to what you would call today strategic investments in human capital.

Whatever money left after making cash payments, allocations for development funds, etc, was to be placed in a Heritage Fund for the future.

The Heritage Fund was for education and social enrichment. In working out the distribution of oil between the states, who had sovereign rights over it, and the federal government, we were guided by concerns for equity between all Malaysians, a concern to develop the poorer states (who also happened to be the oil rich states) and a concern for inter-generational equity. That oil was for special development purposes and it was not just meant for our generation.

Sabah and Sarawak joined Malaya to form Malaysia because of the promise of development funds.

Yet today, despite their massive resources, they are some of our poorest states.

Instead of being our ace up the sleeve, however, our oil wealth became in effect a swag of money used to fund the government’s operational expenditure, to bail out failing companies, buy arms, build grandiose cities amidst cleared palm oil estates.

Instead of helping eradicate poverty in the poorest states, our oil wealth came to be channeled into the overseas bank accounts of our political and politically-linked class.

Instead of being the patrimony of all Malaysians, and for our children, it is used as a giant slush fund that has propped up authoritarian rule, eroded constitutional democracy and corrupted our entire political and business elite.

Our oil receipts, instead of being applied in the manner we planned upon the formation of Petronas, that is, according to its original developmental purpose, became a fund for the whims and fancy of whoever ran the country, without any accountability. The oil that was meant to spur our transition to a more humane, educated society has instead become a narcotic that provides economic quick fixes and hollow symbols such as the Petronas towers.

Our oil wealth was meant to help us foster Malaysians capable of building the Twin Towers than hire foreigners to build them, a practice in which we preceded Dubai. I would rather have good government than grand government buildings filled with a demoralised civil service.

It is no wonder that we are no longer productive, no longer using our ingenuity to devise ways to improve ourselves and leap forward. Malaysia is now an “oil cursed” country. We managed to arrive at this despite not having a lot of oil.

When I started Petronas in 1974, I did not realise I would see the day when I would wish we had not uncovered this bounty.

The story I have told is a reminder of the scale of the challenge of development. My generation of young people faced this challenge in the 60s and 70s. You face it now. The story tells us that development is about far more than picking strategies out of a box. You have kindly invited me to address a seminar on strategies for reinventing and liberalising Malaysia’s economy. But the story of our squandered oil wealth reminds us that it was not for want of resources or strategies that we floundered.

Our failure has been political and moral.

We have allowed greed and resentment to drive our politics and looked the other way or even gone along while public assets have been stolen in broad daylight. I encourage you to take up the cause of national development with the ingenuity that earlier generations of Malaysians brought to this task, but the beginning of our journey must be a return to the basics of public life: the rule of law, honesty, truth-telling and the keeping of promises.

The Malaysia we need to recover is one that was founded on laws and led with integrity.

With the hindsight of history we know such things are fragile and can be overturned in one generation, forgotten the next. Without a living foundation in the basics, you might sense an air of unreality around our talk of reinventing ourselves, coming up with “a new economic model” and liberalising our economy. So before we can reinvent ourselves, we need to reclaim our nation.

That larger community, bound by laws, democratic and constitutional, is the context of economic progress, it is the context in which young people find hope, think generous thoughts and create tomorrow.


Malaysia hear this….

China’s central bank says its foreign exchange reserves rose 16 percent year-on-year to $1.954 trillion by the end of March.

In a notice on its Web site Saturday the bank said reserves increased by $7.7 billion in the first quarter, $146.2 billion lower than the same period last year.

Analysts believe China holds up to 70 percent of its foreign reserves in U.S. dollar-denominated assets, including Treasury securities.

In March, the reserves increased by $41.7 billion, an increase $6.7 billion more than the same period last year.


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.


Stung by criticism about use of billions of dollars in government aid, Citigroup’s Indian American CEO, Vikram Pandit has vowed to take a token salary of $1 and no bonus until the ailing banking giant returns to profitability.

 “I get the new reality and I will make sure Citi gets it as well,” Pandit said Wednesday as lawmakers grilled top executives from eight of America’s largest financial institutions about their apparent lack of willingness to lend despite collectively receiving $165 billion in capital.

“We will hold ourselves accountable for what we do, and that starts with me,” said Pandit, who collected a salary of $1 million last year.

 Citigroup has lost more than $20 billion in the last five quarters.

Appearing before the US House Financial Services Committee Pandit, 52, said taxpayers were right to expect a return for their investment, adding that the bank will pay $3.4 billion in annual dividends on the debt.

“There is a great deal of anger in the country, much of it justified, about past practices,” committee chairman Barney Frank noted in his opening remarks.

The banks have come under fire from lawmakers who criticised bonus payments and corporate expenses such as new executive jets at a time when people across the country are struggling to stay in their homes or losing their jobs.

President Barack Obama last month called the bonuses “shameful” and the “height of irresponsibility.”

Citigroup, which has accepted $45 billion in government bailout money, last month reversed a decision to buy a $50 million corporate jet under pressure from the government. 

The CEOs were asked to disclose their salaries and bonuses for 2008 and 2009 at the hearing. The highest paid CEO for the year was Bank of America’s Ken Lewis with a salary of $1.5 million, while the lowest was Goldman Sachs Group Inc.’s Lloyd Blankfein with a $600,000 salary. None of the executives took a bonus for 2008 or will have a salary increase in 2009.


Another interesting detail by Matthias Chang. I am posting what he has to say about our economic state of affair. I always took an interest on Matthias’s work from the days when he had served as the political secretary to former Malaysian Prime Minister Tun Dr Mahathir. To me Matthias is both a good writer and knowledgeable and has an excellent observation of the economic problem as this crisis is far deeper and he has been saying this all along that the shit will hit the fan.
 

 Shipping rates hit rock bottom I hope you understand what this means

By Matthias Chang
Thursday, 15 January

Global trade has collapsed totally

Shipping companies like MISC and major ports will be in deep shits

Revising my previous forecast on growth

It will be Negative in 2009 for Malaysia

In a recent Strategy Forum which I conducted, I shared a very simple method of gathering “intelligence on our export trade” with the delegates.

I told them that all I need to do is to observe the ships departing from the ports. I look at the load waterline (L.W.L. <!–[if gte mso 9]> Normal 0 7.8 pt 0 2 false false false MicrosoftInternetExplorer4 <![endif]–><!–[if gte mso 9]> <![endif]–> the waterline at which the ship will float when loaded to its designed draft). This will indicate whether a ship is fully laden with cargo. This is simple common sense.

In the past few weeks, many ships were not fully laden. This means that we are not shipping out that many exports <!–[if gte mso 9]> Normal 0 7.8 pt 0 2 false false false MicrosoftInternetExplorer4 <![endif]–><!–[if gte mso 9]> <![endif]–> Q.E.D! The authorities can fudge the figures, but the load water-line cannot lie.

Today, if you go to Singapore, ships are all over the port and idling for want of cargo.

It has now been reported that shipping rates for containers (have) hit zero. Holy smoke, the shit has really hit the ceiling fan! This has never happened before. This means that demand for industrial goods have slumped big time. World trade has collapsed. Exporting economies in Asia have been hit hard by the fall in demand in US and Europe.

Last year, I reported and drew your attention that the Baltic Dry Index which measures freight rates for bulk commodities such as iron ore, grains etc. crashed <!–[if gte mso 9]> Normal 0 7.8 pt 0 2 false false false MicrosoftInternetExplorer4 <![endif]–><!–[if gte mso 9]> <![endif]–> dropping a whopping 96 per cent.

Some idiots in Malaysia have been trumpeting for over a year that Asia’s economies have de-coupled from the Western economies. This is bullshit!

A big chunk of our exports goes to USA and Europe. Now that these markets have collapsed, it is only time that we will face a major downturn that will be deep and long which I estimate will commence by end of the first quarter 2009.

Had Malaysia took pre-emptive measures in 2006 and early 2007, we could have mitigated our exposure. But Badawi was “sleeping” and his stupid 4th Floor boys were too concerned in plundering the economy for themselves, and to quote one of them, “it is our turn.”

Now is too late.

Even RM73 Billion may not be enough to bailout those corporate entities considered too big to be allowed to fail.

It is time to start PRAYING!


     

Porn baron Larry Flynt says that the US Government should help rejuvenate the industry, which has been bearing the brunt of the ongoing global economic crisis, with a financial assistance of five billion dollars.

The Hustler magazine founder has even joined forces with ‘Girls Gone Wild’ video series’ creator Joe Francis to approach Congress so as to sustain the same kind of financial aid as was recently approved for automakers.

“Congress seems willing to help shore up our nation’s most important businesses, (and) we feel we deserve the same consideration.

In difficult economic times, Americans turn to entertainment for relief. More and more, the kind of entertainment they turn to is adult entertainment,” the Telegraph quoted Francis as saying in a statement.

“The take here is that everyone and their mother want to be bailed out from the banks to the big three. The porn industry has been hurt by the downturn like everyone else and they are going to ask for the $5 billion.

Is it the most serious thing in the world? Is it going to make the lives of Americans better if it happens? It is not for them to determine,” the paper quoted Owen Moogan, a spokesman for Flynt, as telling CNN.

Francis is also said to have admitted during an interview with the website TMZ that the move is more of a “precautionary measure” than an emergency rescue.

He, however, insisted that “as long as the government is handing out money, we want to be there to take it.”

The pair admit that though DVD sales and rentals have dropped 22 per cent over the past year, online traffic has continued to grow.

“The 13-billion-dollar industry is in no fear of collapse. But why take chances?” they say.

Flynt insists that Americans can do without cars but not without sex, and the only way Congress could “rejuvenate” the country’s sexual appetite was “by supporting the adult industry and doing it quickly.”

There was no response from Congress to the request.


As far as I can see, this is just a bailout exercise. The 5 billion from EPF via Valuecap Sdn Bhd is to bailout UMNO link corporations in the KLSE which has taken a real beating the last 6 months after March 6th. They are putting wool into our eyes by using our hard-earned EPF contributions trying to solve their problems.

There should be NO BAILOUT! Besides, greed got them into trouble. Bad money practices got them into trouble. Corruption got them into problems. They don’t have financial prudence’s and they are all overrated. They know now to make money by only selling assets . Let them get themselves out of it. They did not pay any taxes on the excess profits that they made getting themselves into trouble. They dug their own grave. Let them claw their way out on their own. They got into trouble trying to justify their high priced executive packages with risky financial instruments back by imaginary money.

I really feel sorry for them that they can no longer make payments on their Bangsar Apartment and London escapades and the shopping sprees in Hong Kong. 

These fellows are running the country down so fast down the slippery slope and its getting more and more cloudy.  We are in a mess.

Malaysia needs help!