Viewpoint by Chris Williamson
Chief economist at global financial information firm Markit
BBC News Business
18 August 2011

Recent events, including stock market falls, the escalating sovereign debt crises, US credit rating downgrade and a near-stalling of growth in the developed world is leading increasing numbers of experts to wonder if the world is facing some fundamental changes.

In reality, many of the ideas reflect trends that have been under way for many years, but the crisis had accelerated the process of change.

Four years after the financial crisis began and the world has certainly not returned to normal.

No major developed economy has yet fully regained the output lost during the recession and global share prices remain almost a third lower than their peak prior to the crisis.

Financial stocks have lost two-thirds of their value. Government debt has spiralled due to the bank bailouts, although it has become apparent that not all governments can finance this debt.

If stage one of the crisis involved the transfer of liabilities from the financial sector to governments via bank bailouts, stage two is witnessing transfers from weaker governments to stronger governments, as the latter seek to prevent the former from defaulting and causing more financial turmoil. Read the rest of this entry »

by Kevin Brown
Financial Times
August 17, 2011

Is Malaysia set for sustained economic growth this year, or exposed to serious potential problems if wobbles in the West turn into another slowdown? It depends who you ask.

The central bank is in no doubt that growth will continue, in spite of a fall in the annual pace of growth from 4.9 per cent in the first quarter to 4 per cent in the second.

In robustly positive comments issued with the numbers on Wednesday, Bank Negara acknowledged the impact of weakness in the advanced economies, but insisted that growth prospects remained underpinned by the expansion of private domestic demand and strong exports of commodities and resource-based products – for which read oil, gas and palm oil. Read the rest of this entry »

By Lee Wei Lian
The Malaysian Insider
Aug 17, 2011

KUALA LUMPUR, Aug 17 — Malaysia’s economic growth decelerated to its slowest pace of four per cent since the 2009 recession as the country was hit by a slowdown in external demand and a moderation in government spending, Bank Negara said today.

This was the fifth consecutive decline in quarterly growth and down from the 4.6 per cent growth registered in the first quarter of this year.

Bank Negara governor Tan Sri Zeti Akhtar Aziz added, however, that stronger growth is expected in the second half of the year and that while there is no revision to the 5-6 per cent growth target for the year, it will “very likely be closer to 5 per cent.” Read the rest of this entry »

By George Friedman
Aug 11, 2011 | Asia Times

Classical political economists like Adam Smith or David Ricardo never used the term ”economy” by itself. They always used the term ”political economy.” For classical economists, it was impossible to understand politics without economics or economics without politics. The two fields are certainly different but they are also intimately linked.

The use of the term ”economy” by itself did not begin until the late 19th century. Smith understood that while an efficient market would emerge from individual choices, those choices were framed by the political system in which they were made, just as the political system was shaped by economic realities. For classical economists, the political and economic systems were intertwined, each dependent on the other for its existence. Read the rest of this entry »

By Yow Hong Chieh
The Malaysian Insider
Aug 09, 2011

KUALA LUMPUR, Aug 9 — Malaysia’s benchmark index regained some ground today but still fell 1.66 per cent as regional markets struggled to halt their slide on European and US debt crises fears.

The index recovered from its early morning low of 1,423.47 to end the day at 1,472.14, down 24.85 points from the start of trading. Losers continued to outpace gainers 828 to 159, with 179 counters unchanged.

The broad-based Emas index meanwhile rebounded to 10,048.74 at market close after losing as much as 490.12 points, or 1.75 per cent, earlier.

The Kuala Lumpur share market is down an estimated RM91 billion from last Monday following last week’s rout on Wall Street, the worst since Lehman Brothers collapsed in 2008. Read the rest of this entry »

By Yow Hong Chieh
The Malaysian Insider
Aug 08, 2011

KUALA LUMPUR, Aug 8 — Malaysian stocks continued tumbling today with an estimated RM31 billion in value shed from Bursa Malaysia, as jittery investors spooked by concerns about the global economic outlook continued to dump shares.

After the sustained sell-off today, sparked by concerns over Standard & Poor’s downgrading of the United States’ credit rating and Europe’s persistent debt woes, the KL share market is down an estimated RM65 billion in value from last Monday.

Losers overwhelmed gainers 1,051 to 67 today while the broad-based Emas index shed 2.39 per cent to settle at 10,227.95 — a five-month low.

The benchmark FBMKLCI slipped 1.8 per cent to 1496.99, also a five-month low. Read the rest of this entry »

— Paul Krugman
The Malaysian Insider
Aug 06, 2011

AUGUST 6 — In case you had any doubts, Thursday’s more than 500-point plunge in the Dow Jones Industrial Average and the drop in interest rates to near-record lows confirmed it: The economy is not recovering, and Washington has been worrying about the wrong things.

It is not just that the threat of a double-dip recession has become very real. It is now impossible to deny the obvious, which is that we are currently not and have never been on the road to recovery.

For two years, officials at the Federal Reserve, international organisations and, sad to say, within the Obama administration have insisted that the economy was on the mend. Read the rest of this entry »

By Lee Wei Lian
The Malaysian Insider
Aug 05, 2011

KUALA LUMPUR, Aug 5 — Today’s global market sell-off wiped an estimated RM26 billion from the KL stock exchange as investors took the cue from the regional meltdown following the rout on Wall Street yesterday.

Trader terminals were a sea of red today as losers vastly outnumbered gainers 934 to 60 while the broad-based Emas index shed 1.89 per cent to hit 10,478, a level not seen since May.

The benchmark FBMKLCI slipped 1.45 per cent to 1524, also its lowest level since May.

“If the Dow has another down day, things won’t look too good,” said Chris Eng, head of research at OSK Research. Read the rest of this entry »