While we malaysians squabble on local politics, the world at large are jittering with a possible global recession looming at large
Will the global recession affect us all?
Or more importantly, will a decline of the us economy, our biggest trade partner over the last many years, hit us hard where it hurt most? (Read the tummy and pocket)
I remember a mckinsey s partner from china whom I met almost 3 4 months ago saying that the old saying that when "america sneezes, asia catches cold" , may not apply anymore. Why? Because we asians now have our very own protection in the form of the great vitamin "C".
Yes, u guessed it right. C for CHINA.
Notwithstanding the fact that he was talking way back 3 to 4 months ago when relatively the "atmosphere " of the situation was not that bad (and I stress atmosphere because really, apart from the increase in petrol inflation, we have yet to see a real economic crash), I do personally feel that we malaysians must now realise that a more macro economic challenge is up ahead. And we thought petrol price going up was bad..
Will china help us (asia/asean) deter a crashing domino effect from the already faltering us economy? Personaly I doubt it very much.
George wehfritz calls china the black hole of our financial universe, a vacuum of supposed financial opportunity gobbling as much liquidity unimaginable before.but will all this flush of funds stay amids the current change of status quo of global economy, and more importantly, is a heated china do well after all as our very own vitamin c?
I'm a believer of micro managing the economy. The national leaders have a strong duty in the cming troubled times to show strong leadership to steer our domestic economy, because no matter what happens to our neighbours, it is how we manage ours that will matter for our people.
By strong leadership I mean in the understanding of what it takes to re ignite the local economic activities and making sure the effects are trickling down.
Strong leadership also means that leaders do not blame it easy on the so called ' global situation '. Yes the global situation is bad, but hey, tough luck, you re the leader, solve the problem. No body pushed you for the job, not most of us at least.
Incompetencies in micromanaging the economy in the upcoming difficult times will almost certainly be considered a crime to the rakyat, not least of the fact that supposedly we would have learnt from our mistakes/successes in the 1998 crisis.
I do not believe that just because we have an ever increasing national reserves (gold, foreign currencies and trade surpluses) , that we would have a more resilient economy.
In times of recession, I think that it is not so much about how much money you have, but how much of those are spent wisely ( and wisely encapsulates the micro activity of making sure our ahmads, ah chong and arumugam gets a feel of them).
I understand recession as a stage when money "stops travelling", or maybe a bit more less than it used to. Less people gets to feel that one ringgit as it is not moving from one hand to another, hence creating less value, and another less numerical digit for that national statistic on the gdp.
Mahathir understood this very well.maybe a bit too obsessed with it sometimes.
I remember rather well that when we were in 1998, a lot of money was pumped into national projects, albeit at a much smaller scale.
Recently, a jkr director who is now working for a private construction company said to me that during those years, instead of starting work only when the project drawings are submitted and approved, it was the other way round.
" the instruction from the top was simple. Give the contractors the money and make sure work continues. When the bridge is built, hand in the drawings later"
This build first, money first, drawing et al coming in later is what I mean by mahathir's supposed obsession in the understanding that as long as we ensure that the ringgit's travelling path are not hindered with unnecessary bureaucracy, then maybe , just maybe we would be able to withstand global recession with crude yet effective micro economic money pumping and trickling it down to the three ah's - ahmad, ah chong and arumugam.
I don't usually agree with the grand old man of malaysia, but sometimes you cannot deny his sheer brilliance in managing a 100billion company called malaysia ( yes that was our worth by the mid 90's or so).
1 ringgit transferring from ahmad, to ah chong, and then to arumugam (no racial/prejudicial connotation intended) would mean that at the end, the value of 3 ringgit is generated through the most basic assumption of micro economy.
This monees that they receive will go through the tills at the local mydin's, which then goes to the local farmer, who uses it to give to his child as daily pocket money, who spends it at the school canteen, who s owner using it to buy more local groceries.. And the money keeps on travelling..
Do this at the largest scale, with careful monetary policy to avoid stagflation, would most probaby bring resilience, if not development to our 24 million people based economy.
Why keep 45 billion or so in the reserve when u should spend some of it to spur the local econimic activity?
But then the question is : are the public works being contracted to the lowest 'denomination' of the people?
Or are we still obsessed in awarding the contracts to a few who might just end up buying a house in london that means more malaysian ringgit flowing out of this country?
I have always believed that it is so much better that public economic projects are denominated to lowest and widest possible group of people.
Yes they may not be as competent as the big ones, but what's the point of giving a 1 billion projects to one particular joker when he ends up spending that money buying yet another apartment along hyde park, while using parts of if to pay for the wife's (or wives) shopping spree at selfridges and the 2 kid's 25 thousand pounds a term tuition fees at Oundel or Concorde?
This is the very failure of public expenditure that has to be avoided.
As a matter of fact, I don't mind if that 1 billion man is given the project, albeit him spending it for a grand house in puchong setia (built by local contractors using local stuff), makes sure the wife spends only at midvalley or the local sundry shop and sending the school to sk puchong jaya (ok maybe we can make an exception to them being sent to sri cempaka).
Understandably enough, I have yet to hear any of these jokers doing this. Well who could resist London?definitely not me.
I'm going off tangent...
Anyways.
Point is the future will be worse than you think ( yes don't believe those propaganda that everything will be fine) and really, the lower and the bleaker the expectation that you have of the future, the better it is for you, personally. A soft landing is always better than a crash.either way we are heading down.
good night, good bye and good luck !
Sent via BlackBerry from Maxis
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