— Tengku Razaleigh

Serious Enough

Although its size remains a mystery, we are glad to be told that the mini-budget will now be bigger and more comprehensive. This is because we have now discovered that the crisis is “more serious than anybody anticipated,”

I wonder who this ‘anybody’ is, and what remote mountaintop he has been living on.

Let’s see if what happened within the month of September 2008 alone in the US was serious enough to wake anybody up:

  • The US Government had to take over Fannie Mae and Freddie Mac
  • Merrill Lynch, AIG and Wachovia had to be rescued
  • Goldman Sachs and Morgan Stanley were turned into bank holding companies.
  • Lehman Brothers submitted the largest bankruptcy filing in US history at USD639 Billion.
  • The Dow fell 777.68 points in a day.
  • There was a massive electronic run on the money markets, with 550Bn reportedly being withdrawn within one two-hour period.
  • The financial crisis became the dominant issue of the US Presidential campaign
  • Henry Paulson, the US Treasury Secretary, had announced a proposal for a USD700 Billion bailout.

By early October, the country of Iceland was bankrupt and the leading central banks of the world had taken the drastic step of making a coordinated interest rate cut. Global credit flows were paralyzed. The global free market system tottered on the brink of an abyss.

Seven months ago it was clear that the world faced the worst financial and economic crisis since the Great Depression.

The world’s markets for goods, services and finance are now tightly integrated by trade, distributed manufacturing and huge flows of  capital. They are electronically linked. Globalization ensures that the crisis is evolving and spreading in ‘internet time.’

Back home our response to the crisis remains bound to bureaucratic and political timetables.

As I said in my last posting, the age of father-knows-best central planning is over. We need quicker, more responsive government. This implies a greater ability to gather and process information, formulate plans, put them into action and measure the results of that action.

We are still not sure if and how the first two stimulus measures have been translated into action.

Meanwhile, tens of thousands have already lost their jobs. The effects of the drop in manufacturing activity have spread to the retail sector as domestic consumption has contracted. Credit remains scarce.  Our poor, especially our urban poor, are at high risk.

It now looks like the downturn will last not one or two but three or four years. We face a cascading series of difficulties at just the moment when our political system is broken and our basic institutions appear to be dangerously decayed.

4 comments
  1. zaidi says:

    Dear TR
    Spot on. The crisis is really a test of any leadership and by any measure ours failed miserably. There is a lot of talk on transformational leadership but I see more action in Libya than in this beloved country. The country need a wider highway (we are facing traffic jam every morning in Penang, LRT is non-existant) and the broadband is way tooo slow. The service sector is not even competitive. The country needs a comprehensive turn around plan by creating competition in every sector; manufacturing, services, academia and public services. Only by competing we can determine our true capacity. Please stop the practice of direct negotiation. Can we label direct negotiation deals as a mutated form of bribery. Syabas Tengku

  2. alvin says:

    YM,

    There is no better assessment than yours for our nation is now ill to the fact that our deficit budget is close to 10% of our GDP (if I am not wrong to quote), which is considered in economic terms close to disaster.

    What has the ruling govt done over these past 20 years where we are supposed to transform our nation into one where we should be proud but sad to day we are far behind even Indonesia, Thailand & Vietnam.

    I stand to ponder what is in store for my children who unwillingly are caught with a mire of uncertain future for them unless we together take charge of our lives, which many others could not.

    Our nation is behest with problems, with a million illegal migrants on our land (who had somehow found their “way” through whatever means best known to the authorities) who stand to edge our our children in earning a meaningful income.

    What is so wrong about Malaysia lies with the policies the ruling govt had, has & will introduce/d (with along the way all sorts of corruption manifesting its ugly face)?

    I only pray the God will heal this land for it is God who is in control, not His sheeps.

    Thank you YM & I wish you & family great health. Selamat Hari Raya

  3. sad says:

    Tengku Li, you are still as sharp as ever! The economy really made ordinary people like me in constant worry. Price increase, petrol, food and all. Heck, I’m nearing 35 but still renting a home without one to call my own. I hope government of Malaysia could cope, but the economic impact from Euro is too much and very likely to have chain impact. Even big company such as Toshiba where I work have been sold you know. There shares were sold to another competitor. Comes 2012 no more Toshiba(E) Malaysia. That for sure an indication of “serious enough” the situation just like your posting title.

  4. Hakimi bin Abdul Jabar says:

    Assalamualaikum w.b.h. Y.B.M. Tengku Razaleigh,

    Dear Ku Li,

    This is what I clearly remember from Malaysian Economics 101 courtesy of Dr. Mahathir…..Malays cannot take from others that’ll be downright theft, we can never appease everyone, what we can do is to enlarge the economic cake.

    What will your remedy be? How do you intend to solve such woes? Merely harping on issues of morality, accountability and rsponsibility? Creating solutions that are truly commercially and viable?

    This is my take on enlarging the economic cake:- Why not set up an IDEA Bank (Conventional and Islamic) [a complementary approach] akin to the Global Ideas Bank, call it let’s say Asian Ideas Bank, and market those commercially viable ideas the world over to generate income and revenue? Or even a co-operative society of ideas? Whereby such ideas at seed level can be further refined at the IDEA Bank and/or co-operative society by the necessary personnel/expert volunteers/successful entrepreneurs and marketed globally? Wouldn’t it be a truly win-win situation? Wouldn’t this will ensure we stave off our backs from the likes of the IMF, World Bank and such, to be economically sovereign and independent? Might also create a critical mass of creators, innovators, inventors and such?

    The global economy is evolving, there are always various opportunities…just read Tun Musa Hitam’s (a.k.a. Moses Black’s) interview on ibtimes.co.uk. Hilarious! He’s Johorean by the way! Maybe he should have the same interview in France flanked by Dato’ Shake, might get him the Legion of Honour! ROTFL!

    Sincerely,
    hakimi bin abdul jabar
    83000 batu pahat
    JOHOR

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