What is now being labeled the Great Recession began in mid 2007 as the sub-prime fiasco in the United States began to unfold. The economic slowdown gained momentum in 2008. As the gathering, storm clouds gathered over the horizon, Governments began to react and take counter recessionary measures.
The Barisan Government for its part remained in a state of denial. Ministers dismissed with some arrogance the notion that the Malaysian economy would succumb to the global slowdown. They argued rather smugly that Malaysia enjoyed a certain immunity as it had decoupled from the global economy. Despite the key economic indicators pointing to a weakening in terms of industrial output, declines in FDI flows, lower exports and indications of capital flight, they continued to forecast robust growth.
The markets for their part made their own assessments and lowered the ratings. The Budget for 2009 presented in August was based on unrealistic and rosy assumptions of growth and buoyant commodity prices, especially of petroleum, and the Government announced a humongous increase in spending both on the recurrent and development budgets. An increase of RM 20 billion was unprecedented.
In the months that followed, as it begun to become crystal clear that the global crisis was likely to be severe, the Finance Minister, the Second Finance Minister and the Governor of Bank Negara indulged in soothing sound bites about the state of the economy even as the indicators pointed to a slowdown; they persisted in sticking to untenable estimates of growth, made light of the weaknesses and refused to use the instruments at their disposal to make policy corrections.
Thus when almost every country was lowering interest rates, Malaysian policymakers remained in a state of paralysis. In late 2008, as it began to become abundantly clear that the economy was indeed weakening, panic measures were taken.
Interest rates were lowered marginally; a Stimulus package of RM7 billion was hurriedly put together; RM5 billion was channeled to up the stock market; there were additional off budget measures taken. At a minimum some RM 32 billion were injected.
Despite this massive infusion of resources the economy continued to spiral downwards. It is patently clear that the remedies adopted, namely propping up “friendly “corporations, massive spending on less than urgently needed infrastructure projects, and handouts to party warlords were not the right mix of measures to stem the hemorrhaging.
The ad hoc packaging of projects with long gestation periods was clearly inappropriate to address the immediate effects of the economic slowdown with consequences for employment and income levels. It is also starkly clear that without policy reforms there would be a failure in coping with the recessionary effects. These lessons were not learnt and sadly have not been applied in crafting the Second Stimulus Package.
The truth of the matter is that Datuk Seri Najib Razak as the Finance Minister was either asleep at the wheel or had his eye on dubious schemes and narrow politicking in the context of UMNO politics. The Second Finance Minister cut a sorry figure as he went about repeating like a broken record that the Malaysian economy would continue to grow; the Minister responsible for the EPU was neither heard nor seen; the Governor of Bank Negara was hamstrung and failed to move by adjusting interest rates or by allowing a true float of the ringgit.
This is a sorry indictment about the competence of the BN government in piloting the economy through stormy and uncharted waters. Najib is scheduled to assume the helm in approximately two weeks. His performance as the Minister of Finance leaves open the question as to how he will steer the ship of state. The omens are not encouraging.
(to be continued)
#1 by k1980 on Thursday, 12 March 2009 - 12:23 pm
What’s RM60 billion to Najid? The Employees Providence Fund alone has more than RM200bil in its coffers.
#2 by DAP man on Thursday, 12 March 2009 - 1:03 pm
Kit,
This not your style of writing. I have been reading your books, articles, speeches for over 30 years and this is surely different.
#3 by ekans on Thursday, 12 March 2009 - 1:03 pm
What happened to ‘sediakan payung sebelum hujan’?
Bila hujan dah turun lebat, baru nak cari payung?
#4 by timmyskh on Thursday, 12 March 2009 - 2:01 pm
Dear Kit,
GM, Honda, Nissan and every autocar maker is making loss and takes move to reduce costs.
The 2nd stimulus we still want to pump in a big amnt of money to automotive industry? What has Proton, Naza and Perodua done to reduce the costs of operation?
Someone needs to question this or else this money would end up as bailout to debts again.
#5 by wesuffer on Thursday, 12 March 2009 - 2:33 pm
billions inject to proton and perodua.
rm5000 buy over your old car then rakyat buy a car which not worth that price(included goverment tax)
dont think rakyat is stupid !
#6 by flyer168 on Thursday, 12 March 2009 - 2:43 pm
Dear YB LKY,
I say Yes, the way our Leaders are handling this very “Complex Global Financial Meltdown” issue….
– We could join the many, many nations to go “Bankrupt” following Iceland….
– With the Global Financial Meltdown, NO Country or Government can understand & appreciate the “Actual Impact” to the “Nation” & its “People” until they get hit “Hard” like “Iceland.”
– and Malaysia could JOIN the many, many more to come!
– Malaysia badly needs “Role Model” established Leaders & Politicians of HONOUR with Calibre, Maturity & Tolerance without Fear or Favour & NOT Political OPPORTUNISTS – on BOTH sides of the Political Divide.
– Further this nation Desperately needs Intelligent, Time Proven Pragmatic Successful modelled, Financial & Politiical “SOLUTIONS” NOW on BOTH sides of the Political Divide, to MITIGATE the IMPENDING Political & Financial fallout.
– Whilst the MATURED & INTELLIGENT G20 Presidents, PMs, FMs, Governments are strategising & synergising their positions on the GLOBAL FINANCIAL “CHESS Board”….
– There is still no “Intelligent Structured Contingency plan nor Quantums” in place in this Bolehland….
– The UMNO/BN Leaders are still in “Euphoria & Denial” even at this 11th hour of our nation’s “Double Whammy, Political & Financial Tsunami” at our doorsteps….
– Our Jaguh Kampung still playing with “MARBLES” when the World’s G20 Leaders are are strategising & synergising their positions on the GLOBAL FINANCIAL “CHESS Board”….
– PRESENTLY our UMNO/BN Leaders “DO NOT EVEN Cross Talk” amongst themselves….
– Just HOW can they change their PARADIGM to ASK, LISTEN, ACKNOWLEDGE, REPENT, LEARN from the best Brains & Best Practices & Best TIME Proven SUCCESSFUL SOLUTION models….
– With the HUGE Resources Avilable OUTSIDE of their “Solution” Bankrupt Jaguh Kampung within UMNO/BN….
– From our neighbour Singapore & the World G20 Leaders who are Intelligently Brainstorming, Strategising & Synergising their positions on the GLOBAL FINANCIAL “CHESS Board”….
– Synergising & Harnessing their Best Brains & Best Practices SOLUTION Models….
– To LEAD their G20 nations & its people SAFELY out of this Financial Tsunami.
– Our Southern neighbour adopts the best criteria Brains, Politicians, Implementers, etc with Academic, Professional,
– With Long and Proven Track performance of “Excellence”, who are “Accredited and Remunerated” very well (from a few hundred thousand to more than a Million Singapore Dollars per annum) with “Structured Job Specs” in this 21st century context…
-….and they DELIVER!
– Sometimes Foreigners (Asian first, then others) are taken for a short contract period to “Groom” the Local “Best” personnel.
– Every National/State Project – DELIBERATION/Decision/ Implementation for the Nation, State and its People are “COST EFFECTIVE” and “NOT SURPLUS TO ACTUAL NEEDS”!
– As such no squabbles & disputes…
– Right person for the job at hand!
– Integrity and Accountability
– Either “deliver or else you are out”.
– With such a Policy in place…
– Their Senior Political Leaders, Politicians, Generals, CEOs, etc do not even have to be seen….
– but everything runs the way it should for the nation and its rakyat’s “Guaranteed Basic Needs”.
– In this Bolehland it is the reverse!
– They are the “True Leaders” involved in the “Bigger Vision” for the Nation’s International Political, Security, Economic, R & D, Manufacturing, etc Policy and Standing…
– The DBS, MAS and Termasek together have financial “Reserves” of more than 600 Billion Singapore Dollars.
– For a small nation, they HAD acknowledged, deliberated, identified and mobilized an “INTELLIGENT, STRUCTURED and DYNAMIC” contingency financial plan IN EARLY 2009, to mitigate this financial meltdown
– Ensuring a “MEANINGFUL Package” is ADDRESSED for its CITIZENS to CREATE a POSITIVE “CASH FLOW” & not for Corporate & Institutional “RESCUE & BAILOUTS”….
– to ONLY WET their “Huge Gaping APPETITE” with no Capital & Cash flow at the Userend “CITIZEN’S” strata.
– They have an initial package of 20.5 Billion Singapore Dollars and they are “Rock Solid” with their cash reserves of 600 Million Sing!
– Versus our Bolehland’s 1st Stimulus package of RM7.0 Billion & now RM60 Billion Stimulus Package …..
– This Bolehland has a “Long” way to go with their “Blatant Denials” & “Childish Charades” even at this eleventh hour, to be able to catch up!
Can they CONFIRM Honestly or by UMNO Hadhari’s swearing To God Almighty….
– That UMNO/BN & its Leaders since 13 May 1969 have NOT committed ANY of the following :
10 Sins Against Humanity & Anak Bangsa Malaysia
Politics without Principles….
Religion without Compassion….
Power without Accountability….
Rights without Responsibility….
Business without Morality….
Development without Sustainability….
Knowledge without Character….
Science without Humanity….
Wealth without Work….
Enjoyment without Conscience….
At the end of the day, the UMNO/BN Leaders are having their “Orbs Squeezed” by their “CORPORATE & BUSINESS CROONIES” who are the “NEW MASTERS” of UMNO/BN & its Leaders.
My take on this whole Charade is….
– “TOO LITTLE TOO LATE, Mr Wannabe.
– You have wasted this nations scarce Funds with your last RM 7 Billion & this new RM60 Billion Stimulus package….
– for your Croony Masters & DEFINITELY not for the “Downtrodden Rayaat”
– Just how can you run this nation “Safely” (like any Decent Honourable father would do for his family) when you have so many Closet Skeletons to face at the coming UMNO Assembly Elections on 28th Mar, Nomination for the 3 bye-elections on 29th Mar, then the Elections on 7th April, etc, etc
– Didn’t you notice why Pak Lah finally “agreed” to step down on 31st Mar….
– That was planned & hatched by KJ & his 4th Floor schemers….
– For the Takeover on April Fool’s Day….yes, it was a Joke the Desperate Wannabe did not even notice!
– Our Constitution’s clause on the position of PM vs Party President…silent on DPM ’s position, etc, etc
– Why now PM is meeting & having lunch with DSAI?
– You go figure out guys…
.
– Failing which….People’s Power will Prevail & We shall Overcome….
#7 by flyer168 on Thursday, 12 March 2009 - 2:46 pm
May I share this with you & your readers.
http://ampedstatus.com/economic-crisis-usa-riots
Economic Crisis = USA Riots
Posted on Tuesday, March 10th, 2009 at 10:37 am , Filed under Economy, News, Politics, Real News . Follow post comments through the RSS 2.0 feed. Click here to comment, or trackback.
“The riot be the rhyme of the unheard!”
Citizens of the US… Brace for IMPACT!
As the global economy continues its downward spiral, rioting due to this Wall Street led meltdown is spreading through the globe like wildfire. The list of countries experiencing civil unrest is growing by the day, to name some recent hotspots: Bolivia, Bosnia, Brazil, Britain, Bulgaria, Cameroon, China, Egypt, France, Greece, Germany, Haiti, Iceland, India, Indonesia, Ireland, Ivory Coast, Latvia, Lithuania, Mexico, Montenegro, Morocco, Nigeria, Pakistan, Panama, Philippines, Russia, Senegal, Thailand, Turkey, Ukraine and Yemen.
In an article titled “A Planet at the Brink: Will Economic Brushfires Prove Too Virulent to Contain?”
Michael T. Klare explains:
“As people lose confidence in the ability of markets and governments to solve the global crisis, they are likely to erupt into violent protests or to assault others they deem responsible for their plight, including government officials, plant managers, landlords, immigrants, and ethnic minorities. (The list could, in the future, prove long and unnerving.)
If the present economic disaster turns into what President Obama has referred to as a ‘lost decade,’ the result could be a global landscape filled with economically-fueled upheavals.”
A UK Guardian news report ran with the headline:
“Governments Across Europe Tremble as Angry People Take to the Streets.”
Once stable countries have seen millions of their citizens revolt
– taking to the streets, disrupting public services, blocking roadways, participating in nationwide strikes, seizing shopping malls and engaging in many other forms of civil disobedience
– as entire governments have fallen. Government offices, public facilities, businesses, homes and cars have been vandalized, looted and burnt to the ground. Death tolls and crime rates due to this crisis are reaching epidemic levels.
However, here in the US, we haven’t seen much unrest yet. With the election of Obama we have had a brief reprieve, as HOPE momentarily shined across the USA.
The US presidential election and the rise of Obama came just in time. (Could you imagine what might have happened under another year of Bush-Cheney rule?) The hope-filled Obama is the perfect figurehead casting the perfect illusion. The Obama illusion is one of a new day, one of hope and better times ahead.
As positive an impact as Obama might have on governmental policy and national confidence, we can only escape reality for so long.
In the words of Chris Hedges:
“It is only a matter of time. And not much time. When things start to go sour, when Barack Obama is exposed as a mortal waving a sword at a tidal wave, the United States could plunge into a long period of precarious social instability……”
#8 by Yee Siew Wah on Thursday, 12 March 2009 - 3:39 pm
This guy hasn’t got a clue of what finance is and he is running an important ministry like FM. Look, he cant even manage his private affairs. Either his advisers and deputies are equally dumb dumb or plain stupid. We believe the $60B will either ended up in all GLCs or the corrupted politicians and their cronies in BN especially UMNO.
After announcement of the $60B stimulus package by him, our Bursa dipped instead of going up while other regional bourses has gone up. What stimulus he is talking about??? Perhaps he was referring to the other type of stimulus for all we know??
#9 by i_love_malaysia on Thursday, 12 March 2009 - 4:45 pm
10% cut of RM60B will be RM6B!!! The bigger the package the better!!! The higher the deficit the better!!! The more govt servants the better!!! What do you and me get???
NOTHING!!! Except more traffic jams & flash floods!!!
Very soon, 1 Singapore Dollar will be = RM3.00!!!
#10 by i_love_malaysia on Thursday, 12 March 2009 - 5:09 pm
Petronas should start pumping more oil now as OPEC is cutting more output, so that we can continue to have the immunity against world great recession!!! Time to sell AAB’s private jet and buy a new private jet at discounted price for our future PM!!! Someone needs to get some commission to survive!!!
#11 by wanderer on Thursday, 12 March 2009 - 5:56 pm
When the message finally hit home, the FM is flying around like a blue a## fly, knocking at all the wrong places. Where is the priority given to saving jobs. In Australia, the second stimulus package is already in force, yet, unemployment reaches over 5% currently and expected to go higher, forecast to reach 7% by the end of the year.
What money was kept aside to help those who really could’nt make both ends meet.
UMNO-BN govt is not known to be a very efficient custodian of the nation fund. Pray that there will not be too many wasteful spending…….
#12 by taiking on Thursday, 12 March 2009 - 7:06 pm
A blissful bask in ignorance indeed. I can. Unfortunately najib can’t. 32b has been despatched by him to go after dubious objectives. Now another 60b is on the way. The same way, I am afraid. Germany put in store a scheme to salvage its car industry. That is quite justifiable given that car sales is an important earner for Germany. Najib attempted something similar. But our car industry is too small even in the context of our own economy. And in any event it really is not a priority sector for him to concentrate on. I dislike the grin he put on in the presence of pressmen. Its fake. As fake as the mini budget is. After months of proclaimation that our fundamentals are strong and that we could weather the financial crisis, he suddenly saw the need to dish out 32b and now 60b more. Now what actually is going on. We do not live in hardened bomb shelters. Even if we do, we still need doors so that we could move in and out and ventilation holes for air exchange to take place. The point is the waves are coming and they have picked up quite a bit of energy and momentum along the way. When they arrive (which will be sooner than we can ever be ready) najib’s grin can do little to soften its impact and effects. When the waves come, I hope they sweep him and umno away to neverland never to return.
#13 by anna brella on Friday, 13 March 2009 - 2:28 am
PARTY-TIME!!
I bet at least 50% of that RM60bn will disappear needlessly into those forever-greedy and corrupt cash asset-sucking UMNO/BN/crony-blackhole tubes.
And very conveniently too I bet, without any audit trails seemingly left behind for that pointlessly useless Malaysian Authority on Crap & Cack to track when that inevitable accountability exercise comes to be done in say, two years’ time, albeit I’d guess as the usual pretend exercise that we are all so well associated with by now….wink, wink and yawn, yawn.
Anyone want to take a bet against that happening?
“Imagine Power To The People” John Lennon.
#14 by frankyapp on Saturday, 14 March 2009 - 5:00 pm
Anna brella,there’s nothing to bet,these greedy fellows are now eating.digging,cuting,destroying,repaveing,rebuilding,replanting almost all good things in the country .Here’s some example,good trees are cut down ,replaced with expensive ones,good working lamp posts are taken doun,replaced with grand brand new ones,path ways bricks are destroyed,replaced with fancifful ones,good airport terminal {kota kinabalu}destroyed,rebuild with unknown costs.good city roads ,just marked with white and yellow road markers,destroyed,repaved and remarked. Recently completed path ways,demolished,just to widen it,then rebuilt.Healthy and pretty city flowers removed overnite,replaced with expensive ones complete with gaint vaves/pots. Now guys,this is only some tips of the iceberg. RM 60 billion ,with these types of spending stimulation by these umno/bn guys,what do you expect the rakyat benefit from this stimulus package ? If you are living in the country eg poorfarmers,odd jobers,one man fisherman,naive poor kampong folks what do you think these poor rakyat can benefit from all these so called city and subruban developments ?On behalf of them,I can tell you ,NOTHING .The corrupted Umnoputras ,umno war lords and BN’s corrupted cronies are the real beneficiary.
Hea
#15 by anna brella on Sunday, 15 March 2009 - 2:20 am
Sorry, this might be a foolish question, but being born a fool, I’ll ask it anyway.
Since that is a HUGE outlay of the people’s assets to help recover from this coming recession/depression, why can’t the Malaysian People ask their Government, or more directly, their Finance Minister, to set up an information and accountability tracking website like the excellent one set up recently by President Obama and his team?
You can find that excellent example at http://www.recovery.gov
Now that information/accountability website would, IMO, be a good outlay of some of that RM60bn.
And importantly, it would also help to create some good employment and also help everyone else to take ownership of this extraordinary level of exceptional spending by their Government and so help to keep an open check and balance on all the other items of spend that will be paid for from that RM60bn allocation for national recovery.
“Imagine Power To The People” John Lennon.