Worst of financial crisis is over?

Former U.S. presidential economic adviser: worst of financial crisis is over

Special Report: Boao Forum For Asia 2009

BOAO, Hainan, April 19 (Xinhua) — The worst of the financial crisis is finished, and the world is entering the time when things will get gradually better, John Rutledge, a former U.S. presidential economic advisor, said here Sunday.

He made the remarks during an exclusive interview with Xinhua at the Boao Forum for Asia (BFA) in China’s southern province of Hainan.

The recession in China has already “passed the bottom”, while the recession in the United States is “at the bottom”, he said while describing the current global economic condition.

“The capital markets around the world are recovering very nicely,” he said, adding that the real economy and paycheck have not yet hit the bottom, but “very near bottom”, and will most certainly be improve by the end of the year.

He is more optimistic about the prospect of China’s economy, as he is likely to raise the forecast of China’s economic growth rate in 2009 between 6 percent and 8 percent.

“I think the recent signs suggest the number is too low,” he said, referring to his previous forecast between 5 percent and 6 percent.

In terms of growth, Rutledge thinks China will come back fast, while the United States will revive more slowly.

Rutledge also praised China’s massive stimulus package.

“China has almost entirely aimed at construction and infrastructure. As Wen said, infrastructure will make more productivity later for the economic growth,” he said.

Rutledge pointed out that China’s stimulus package is of great social value, as it is aimed directly at construction in an effort to raise the income of migrant workers.

“They (migrant workers) transfer money they make from rich cities to families in small villages. It’s very important to keep the flow of money to help the less fortunate villages to grow,” he said.

China does not need another stimulus package, as the current one is well-designed, fast, large, and it is aimed at people who “need help most”, he said.

“We can declare victory, I would say,” said Rutledge, noting that the crisis would make integration between Asian countries closer and boost cooperation between governments.

“This is where the stability of the Asian growth machine will be determined,” he said.

  1. #1 by All For The Road on Monday, 20 April 2009 - 4:42 pm

    The question is : “Can we get out of this economic meltdown soonest possible?”

  2. #2 by ekans on Monday, 20 April 2009 - 4:54 pm

    Nice, almost ‘soothing’ words from a former U.S. presidential economic advisor.

    So, what does the present U.S. presidential economic advisor say?

  3. #3 by monsterball on Monday, 20 April 2009 - 4:56 pm

    You can keep on dreaming financial crisis is over in Malaysia.
    Before the so call ….world financial crisis..a country like Malaysia…where the rich gets richer and poor gets poorer…it is not crisis. It is pure corruptions from the people in power.
    Check it out…are Malaysians getting poorer and poorer?

  4. #4 by chengho on Monday, 20 April 2009 - 5:28 pm

    No crisis in Malaysia….only slowdown…..and correction…

  5. #5 by Godfather on Monday, 20 April 2009 - 5:47 pm

    Betul, no crisis in Malaysia…only Korek-tion….Korek, Korek, Korek…

  6. #6 by ctc537 on Monday, 20 April 2009 - 8:07 pm

    If the BN federal and PR-controlled state governments can work out a compromise where politics and economy are treated as two completely separated matters. Put it simply, there will always exist political divide but economically there will always be close cooperation between the federal and PR state governments. The U.S. and China tolerate each other along these lines, and the two sides now benefit tremendously from their close economic relationship. We now see that the huge trade surpluses gained by China from its huge volume of exports to the U.S. is being used directly and indirectly to help the latter to weather the on-going financial crisis. Recently, there have been some quarrels between the two over the encroachment of U.S. navy ships near the island of Hainan, but what is notable is that trade and economic relationships remain unaffected at all.

    I don’t know if there is such an arrangement between the federal and PR-controlled state governments What I mean is genuine and sincere cooperation on economic matters Yes, the worst of the financial crisis is over, since John Rutledge, a former U.S. presidential economic advisor says so. I am just being optimistic. Are our leaders the pragmatic lot? CM Lim Guan Eng and MB Tan Sri Khalid Ibrahim are ultra pragmatic and rational people, I’m sure.

  7. #7 by limkamput on Monday, 20 April 2009 - 9:42 pm

    Boao Forum, Davos Summit, what difference do they make? And who is this John Rutledge? Does he really know? All these so called cleaver people now seem to know and able provide one thousand and one reasons why the global economy is in shamble. But no one has warned us the world economy was on the brink of collapse. Instead every one of these clever people was leveraging to the keel and was predicting how commodity and other asset prices will continue to defy gravity.

    Having run the global economy to its grinding halt, they are now quick to provide all kinds of prescriptions to revive the economy. The prescriptions thus far are nothing more than “free lunches” for the enjoyment of those who plundered and squandered in the first place. The prescriptions thus far are nothing more than massive creation of fiat money at the expense of savers and those who work their bottoms out to earn an honest living. This is the baloney of the global economic and financial system we know today where wealth is created through leveraging and paper trading.

    Do we really need this Rutledge fellow to tell China that it should generate its own demand instead of continuing to rely on exports in exchange of accumulating useless US fait money which we dearly call “foreign reserves”?

  8. #8 by negarawan on Monday, 20 April 2009 - 9:48 pm

    Listen to George Soros.

  9. #9 by Godfather on Monday, 20 April 2009 - 9:54 pm

    No, listen to the new chairman of the economic council, Diam Diam Daim. And listen to our economics professor emeritus Dr Mamakthir.

  10. #10 by singma on Monday, 20 April 2009 - 11:23 pm

    DAP must counter this !!!


    Don’t discuss Fairus issue publicly, PKR tells Guan Eng

    Lim Guang Eng

    PETALING JAYA (April 20, 2009) : PKR deputy president Dr Syed Husin Ali today asked Penang Chief Minister Lim Guan Eng not to discuss Mohammad Fairus Khairuddin’s resignation as the Penanti assemblyman in the media “as it would only benefit the opponent”.
    “Datuk Seri Anwar Ibrahim (the PKR de facto leader and adviser) and Lim spoke to each other today and I believe all confusion about the matter has been solved,” Syed Husin said in a statement.

    He called on the Pakatan Rakyat leaders and members to unite to ensure victory if there is a by-election in Penanti.

    Syed Husin said Fairus had officially resigned last Thursday, following a discussion with Anwar the day before, and that it was his own decision.

    Zahrain Mohamed Hashim
    He said the Penang state assembly Speaker had sent Fairus’ letter to the Election Commission and he hoped the EC would act “professionally according to the law and not be influenced by certain authority, who do not want a by-election”.

    In Penang, state PKR chief Datuk Zahrain Mohamed Hashim has taken Lim to task for using the media to voice out his dissatisfaction towards the party and Anwar, Bernama reports.

    He said that as a partner in the ruling coalition in Penang, it was not proper for Lim to voice out his dissatisfaction in the media over the appointment of the deputy chief minister (I) and the resignation of Fairus as the Penanti assemblyman.

    Zahrain said there were internal mechanisms to discuss the matter.

    Anwar Ibrahim

    “As a member of the pact, why can’t he discuss directly with Anwar on Fairus’ successor as DCM (1) and Penanti assemblyman?” he asked.

    He said the DCM’s appointment and the issue pertaining to the Penanti seat were PKR’s internal affairs.

    In a separate statement, Penang Gerakan secretary Ong Thean Lye said the party was surprised Lim has appeared “too subservient” to Anwar, even on issues relating to the state administration.

    He said that when Lim was in the Opposition, he used to criticise Barisan Nasional component party leaders, saying they should not “bow” to Umno leaders.

    “But now Lim himself is kow-towing to Anwar, especially relating to the latest incident on the appointment and replacement of the deputy chief minister (I),” Ong added.

    Updated: 07:17PM Mon, 20 Apr 2009

  11. #11 by Godfather on Monday, 20 April 2009 - 11:24 pm

    And of course listen to our in-house economics guru Limkamput.

  12. #12 by Onlooker Politics on Tuesday, 21 April 2009 - 12:06 am

    “No crisis in Malaysia….only slowdown…..and correction…” (Chengho)

    I wonder whether you purportedly try to mislead the Malaysian people on the existence of current global economic crisis or you are just a novice layman who knows nothing about economics.

    If there is no crisis in Malaysia, then why should your political master, Najib, formulate a so-called Mini Budget in the Parliamentary session recently for purpose of spurring the economic activities (although it is just a vain effort)? Najib even offers the tax-free incentive for those bankers who voluntarily offer indulgence or grace periods to the bank loan borrowers in case the borrowers have difficulty to service (pay back) the loan and/or interest expenses to the bankers. Najib encourages the bankers to delay taking legal action against the defaulted loan borrowers, unfairly treating the bankers as the nanny who is to take care the kids in Najib’s own family.

    Many Najib’s apple polishers praise Najib for making a proposal that encourages the bankers to allow delay in repayment of loan which falls due to the bankers by the borrowers. From the first glance, the so-called indulgence or grace periods may be a merciful grace to the loan borrowers who are in financially tight and illiquid situation due to lack of market demand for their products or services in midst of a global economic recession. However, indulgence and grace periods from the bankers may not be beneficial to the overall banking sector of Malaysia in the long run. If the Malaysian people are already getting used to the bad habits of liking to spend with debt-financing but always showing reluctance to pay due debt promptly due to the availability of indulgence and grace periods offered by the Bankers, then sooner or later the commercial banks in Malaysia will have to find that there are too many delinquent loans which have to be recorded in the accounting books and be written off as bad debt expenses due to the clients’ refusal to service the bank loan interest and refusal to pay bank the loan principal on the due date designated for loan repayment.

    I wonder how much longer the commercial banks in Malaysia can sustain their long-term survival in the banking business if the bankers are not allowed by the high court to “lelong” the loan borrowers’ assets that have been pledged to the bankers as collateral. By looking at the number of people who have defaulted in paying back the credit card loan on time and then are forced to pay an overly high overdue interest, we can accurately warned that the number of bankrupt citizens of Malaysia will be on the trend of fast escalating when the high courts of Malaysia are to improve their work efficiency to allow faster hearing of bankruptcy suit being filed by the creditors or the bankers.

    I will not be surprised if Chengho has to find that more and more people of his gangs are now living in the financial unsound situation and may be declared bankrupt by the High Court every now and then. Who dare to say again that there is no crisis in Malaysia?

  13. #13 by yhsiew on Tuesday, 21 April 2009 - 12:19 am

    So long as the wings of errant bankers, rogue money and stock speculators are not clipped, the financial meltdown will make a comeback.

  14. #14 by waterfrontcoolie on Tuesday, 21 April 2009 - 12:40 am

    Let’s put politics aside for the time being, our export has dropped some 30% so PR and BN should find some time to rectify this loss. They can fight ’til kingdom come but please find a common ground to allow the economy of the country to improve.
    It is no use to the people if the economy is worsened, no matter who is the GOMEN!

  15. #15 by limkamput on Tuesday, 21 April 2009 - 12:50 am

    Onlooker Politics,
    I don’t particularly like eunuch chengho because we all know he is an imposter.

    However what you wrote was only one side of the coin. How can you completely ignore the fact that banks, in many situations, are the main culprits that caused the present financial fiasco? They lent excessively and recklessly, taking excessive risk because the money in the banks was not theirs but belongs to depositors. You have to ask why so many loans have turned delinquent. For sure, many borrowers are irresponsible, borrowing excessively to undertake unviable and ‘white elephant” projects. However, you must also ask why bankers are so blind and irresponsible too. Why are they lending so recklessly knowing that many of the borrowers may not be able to pay back. That is why I have often condemned the bailout packages hammered by the governments. Why save the banks (and their executives) who are irresponsible? The government should bail out the depositors, not the banks.

    If the governments everywhere continue to bail out banks, then there will be no lesson learned – the phenomenon we generally referred to as “moral hazard” where someone takes excessive risk simply because if the loss occurs, he is unlikely to suffer the consequence.

    I know some of you would probably come back with the argument that banks are too important and too big to fail. I shall leave this alone for the time being.

  16. #16 by limkamput on Tuesday, 21 April 2009 - 12:59 am

    In a separate statement, Penang Gerakan secretary Ong Thean Lye said the party was surprised Lim has appeared “too subservient” to Anwar, even on issues relating to the state administration.
    Hello another Ong, when we see a real spineless ass, we will know. Lim GE is no subservient to anyone.

  17. #17 by dawsheng on Tuesday, 21 April 2009 - 1:05 am

    Chengho is not all wrong. We are facing the slowdown but that is the real crisis, the economy will never go fast forward under BN, what crisis can be worst than this?

  18. #18 by dawsheng on Tuesday, 21 April 2009 - 1:09 am

    “So long as the wings of errant bankers, rogue money and stock speculators are not clipped, the financial meltdown will make a comeback.” – yhsiew

    The future is not ours to see.

  19. #19 by limkamput on Tuesday, 21 April 2009 - 1:52 am

    Sdr Lim, you may want to take note that getting into your blog is getting excessively slow again. I have no problem getting into other sites except yours.

  20. #20 by boh-liao on Tuesday, 21 April 2009 - 4:44 am

    Yes, the worst is over.
    Promptly the DJIA dropped almost 300 points.

  21. #21 by Bigjoe on Tuesday, 21 April 2009 - 8:40 am

    There is a good chance that the financial markets have hit the bottom BUT

    1) It does not mean that it cannot hit the bottom again or come close to it.

    2) Recovery is not going to be fast almost everywhere. China no doubt has the best recovery outlook which is not exactly good news because it will be too much fiscal and monetary and not enough productivity led meaning inflationary. A fast China recovery and a slow recovery in the West mean inflations we saw two years ago will come rushing back.

    3) There is still a danger that we may yet hit another crises if policy makers overdid it on fiscal and monetary wise that will lead to another bubble and crash.

    In other words for the man on the street and the marginalised (which means most Malaysians), good times is far far away still.

  22. #22 by taiking on Tuesday, 21 April 2009 - 8:42 am

    Worst is over?
    No. Not for umno.
    Not for malaysia with umno in control.
    With najib at the wheel.
    Not us.
    No. Not for us.

    We did not recover very much from the currency crisis 10 yrs ago unlike in other countries. So the tumble down this time round under the present financial crisis did not appear so bad for us. That’s what it is. Not something we can take comfort in or for that matter be proud of.

    Recovery? Beware of double dip. I am not saying there will be one. Just be aware. It has happened before during the currency crisis and during the great depression. So sit tight and exercise caution. The correct caution to take is to disbelieve umno.

  23. #23 by Lee HS on Tuesday, 21 April 2009 - 11:44 am

    I am not optimistic about economic recovery for Malaysia. I am no economist but facts tell us that investors are not coming from foreign and domestic circles. Thus there is no external and internal investment-driven job creation.

    Demand for our products is falling. Factories are relocating overseas. Our investment climate is not-investor friendly. UMNO Government is blocking Chinese enterpreneurship. The bank is not lending to the Chinese business. Monopolistic type of business is given to cronies.

    If only oxygen we breath in can be charged, UMNO government will approve the establishment of a company to force us to pay for it.

    The world economic landscape has changed. Malaysia is no longer living in uncompetitive environment. Our underdeveloped neighbours have been awaken. Thailand is much better than us in certain way. Vietnem is chasing us. Indonesia is running close behind. They have better educational level as compared to their parents. They are as capable as Malaysian and speak better English than our labour force now. Let alone the economic environments in China and India that are expanding fast.

    So how can we be so optimistic about Malaysian economy?

  24. #24 by sightseeing on Tuesday, 21 April 2009 - 12:29 pm

    Sorry for sidetrack but I believe readers will be interested to read oversea report of the murder of Altantuya Shaariibuu. This report appeared in a major Canadian newapaper:


  25. #25 by Outcasts on Tuesday, 21 April 2009 - 12:37 pm

    Last year Nobel Laureate for Economics, Paul Krugman says that “don’t count your recoveries until they are hatched.”

    US giant banks have come out with better than expected Q1 profits. But what they did is to “redefine” their quarters and hence the worse months essentially “disappear” from their accounting books. That’s why Dow Jones still dipped 300 points last night though banks are reporting profits…

    Ultra low interest rates are fueling inflation. If the financial markets and real economy do not recover when inflation makes a come back, then we’ll be in deeper shit than now – stagflation!

  26. #26 by taiking on Tuesday, 21 April 2009 - 2:05 pm

    So china’s economy is showing signs of recovery. That is hardly surprising. Mainland chinese have a lot of savings. The chinese government is tapping into this pool of money. Wot the chinese government is doing is to make up waning foreign demand for chinese goods with domestic demand. Hence the recovery we see in china is not likely to have any great impact beyond the chinese shores until sometime later. Wot about the States. I dont know. They practice an opaque form of transparency. Good things can be bad. In fact very very very good things can also be bad. Believing them is like believing umno. So should we cheer? I guess not. Not so soon. Wait for another six months. Better still. Wait till the end of 09 to be sure.

  27. #27 by jbozz on Tuesday, 21 April 2009 - 2:14 pm

    What is done is done! nothing u can do abt. it, there are still people blindly believe it is not true, the poor thing is law is used to defend the rich and powerful mastermind behind every crime scene.

    Therefore, please send your children overseas, they have a much fair and transparent govt.

  28. #28 by Onlooker Politics on Tuesday, 21 April 2009 - 3:02 pm

    “However what you wrote was only one side of the coin. How can you completely ignore the fact that banks, in many situations, are the main culprits that caused the present financial fiasco? They lent excessively and recklessly, taking excessive risk because the money in the banks was not theirs but belongs to depositors.” (Limkamput)

    I did comment in Lim Kit Siang blogsite not too long ago making accusation that the banking sector in Malaysia was a big hoax industry.

    As a financial professional who works in Malaysia long enough, I know some credit controllers of the commercial banks did take bribe and in return offer consultation service to the bank’s clients on how to do account polishing with fictitious transactions in order to show the best financial ratio and market sensitivity presentation in the financial statement. As a result of the job-related experience, I personally don’t quite trust the financial reporting of some KLSE listed companies, whether they are from mainboard, second board or Mesdaq!

    Anyway, there are still some so-called retail investors in Malaysia who like to do gambling with KLSE stock counters. For most prominent economists, the major concern about the economic crisis will not be so much on whether the stock market will be in the bullish mood or in the bearsih mood. The main concern will be on whether the global economy is going to have a V-shape curve, a U-shape curve or an L-shape curve in the intermediate term.

    My guess is that Malaysia is going to have an L-shape curve for the next two years because many foreign investors have lost their confidence in the economic climate of Malaysia due to long periods of businessmen’s getting stuck in political instability, flip-flop government policy changes, and lack of concensus among the top political leaders of the ruling party within the party itself.

  29. #29 by Onlooker Politics on Tuesday, 21 April 2009 - 3:28 pm

    We can comfartably say that the banking sector of mainland China exercises a high degree of prudence and conservative approach in approving bank loan to the loan borrowers, mainly due to the fact that mainland China is not lack of quality personal assets which can be pledged to the commercial banks as collateral by the private sector businessmen.

    In Malaysia, most government-owned commercial would not exercise adequate prudence in giving out loan to their clients. This is because most bank managers are agency managers who don’t really care much whether the clients have the true capability to service the loan interest and/or to pay back the bank loan at its designated due date. Most managers are concern about only the clients would pay them any up-front money for signing the letter of offer for bank loan facilities offered to the clients. Most bank managers would not care much about the asset quality of the mortgaged properties which are to be pledged by the clients to the bank as collateral. Due to keen business competition, most licensed property valuers are also not observing their professionalism when doing the property assessment for purpose of being used as a reference by the commercial banks in giving out bank loan.

    Therefore the comment of the former U.S. Presidential Economic Adviser, although it is well describing an optimistic situation of mainland China, may be irrelevant to Malaysia because the comment will be out of context when being borrowed and transferred for applying to the hanky panky situation of Malaysia.

  30. #30 by Onlooker Politics on Tuesday, 21 April 2009 - 3:31 pm

    “In Malaysia, most government-owned commercial would not exercise adequate prudence in giving out loan to their clients.”

    Sorry, a slide of pen!
    In Malaysia, most government-owned commercial BANK would not exercise adequate prudence in giving out loan to their clients.

  31. #31 by TheWrathOfGrapes on Tuesday, 21 April 2009 - 4:47 pm

    /// # chengho Says:
    Yesterday at 17: 28.50
    No crisis in Malaysia….only slowdown…..and correction… ///

    No krisis in Malaysia…only keris…and korupsi…

  32. #32 by frankyapp on Wednesday, 22 April 2009 - 3:31 am

    Australia just sunk into reccession,Japan needs additional stimulus package,some European countries have recently been bailed out by the IMF,many African and some latin south american countries are going bankrupt,President Obama said that there is a glimpse of hope in the US economy ,hence I am skeptical of what this former US presidential economic adviser said about the present global financial crisis. I think the whole world needs to work together within a well co-ordinated,well formulated economic mechanism to stimulate and generate the growth of the stale economy of all countries .Unless we all can do that,the glimpse of hope will remain dim.

  33. #33 by jbozz on Wednesday, 22 April 2009 - 11:12 am

    This is not news, since the Soros incidents, many international investor firms has already withdrawn and rule out Malaysia as their prime location. And to make matter worst the Iskandar project, only attract fraction of investors to this country.

    “political instability, flip-flop government policy changes, and lack of concensus among the top political leaders of the ruling party within the party itself.”

    This happen not only in Malaysia, but Taiwan, Thailand, and some third world countries.

    Malaysia belong to 3rd world countries that’s the fact all childrens must learn to accept with grace.

  34. #34 by Onlooker Politics on Thursday, 23 April 2009 - 1:29 am

    The commentator jbozz was trying to compare Malaysia to Taiwan and concluded that Taiwan also had the same problems as Malaysia in relation to “political instability, flip-flop government policy changes, and lack of consensus among the top political leaders of the ruling party within the party itself.”

    However, jbozz failed to realize a crude fact which was a very important factor for the past success of Taiwan in its economic prowess during the 1970s, 1980s and 1990s. This crude fact was that Taiwan implemented a very strict and tight custom control on transfer pricing, which was the commonly used method for stealing in corporate world and then illegally transferring the money to and from Taiwan in respect of the outside world. One legal requirement which has been imposed on importation of foreign goods by anyone to Taiwan from foreign countries is that at the Taiwanese Custom Checkpoint during the custom clearance process, the imported goods must be supported with a proper shipping document, invoice, the official receipt of payment and the foreign remittance document which are to be duly signed and endorsed by the exporter. Taiwanese Custom will never allow custom clearance to be proceeded until an official receipt of payment and the foreign remittance document have been presented to the custom clearing officer. This legal requirement has never been required for implementation in Malaysia therefore it is very easy for the Malaysian businessmen to borrow with overgearing from the commercial banks by way of trade financing and then to steal by way of inflating the import cost through creation of fictitious proforma invoice by a foreign company.

    In many cases, the financial accounts of the importers of Malaysia will indicate full payment has been made to the foreign exporters but only partial payment has been made through telegraphic transfer via the banking system while another partial payment would usually be paid with cash mode by the importers. In most cases, the payment by cash mode was indeed the money that had been stolen by the company director from the company’s banking account. That is the usual way how the money in the banking account of a publicly listed company in Bursar Malaysia can be coveted and the company then be turned into insolvency or bankruptcy by its managing director at the expense of the stock market retail investors.

    With the existence of too many hanky-panky practices in the corporate world in Malaysia, it is no wonder that many economic fortune tellers can precisely predict that Malaysian economy will have a big down trend cycle in each and every ten years’ interval.

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