Clueless in Economics?
It was in 1965, when the renowned economist and Nobel prize winner in Economics, Milton Friedman said, we are Keynesians now. The exact words were, in one sense we are all Keynesians now and in another nobody is a Keynesian. In 1971, Richard Nixon says, in Economics, I am now a Keynesian. In later years, these have been generalized into We are all Keynesians now. Personally I am not over enthusiastic about all this we are Keynesian or not Keynesian talk. All I am interested is does our economic plan work? Or more important do we have a plan at all. When my blogger friend de Minmis wrote that our policy makers are using ancient ( in internet time) data, he was stating the very obvious but hidden from public fact. Can we trust first of all the people at the Statistics department doing their work? And the various so called economic planners in state UPENs and EPUs; how many of them familiarize themselves with econometric analyses. The production of data and the application thereof must be a rigorous mental exercise. Now, we can't deny the Malaysia will be facing hard economic times. We are a trading and export driven economy. If the big economies are facing problems, how do we sell to them? The other recourse is how to prop up or goose up domestic aggregate demand? So we fall back to the old saying- we are all Keynesians now. That is, we believe that spending our way out is the way to overcome economic recession. The question is how where to spend on? So far, what are the stimulus packages has the government announced? There have been 2 actually. The first was the RM5b rescue package to a certain Valuecrap Valuecap to buy what were euphemistically termed as undervalued stocks. That measure alone fortified my belief that the analysts and leaders in Valuecap can be as moronic and as ordinary as the Ah Beng investor who sits daily at the floor of his brokerage office. The Ah Beng would probably know better what the undervalued stocks are. I think the government can do better giving the RM5b to the Ah Sohs and Ah Bengs who can pick winners in the stock market. The idea of taking money away from the EPF and placing them in the hands of more competent analysts at Valuecap is laughable. On the one hand, it insults the intelligence of the analysts at EPF and second, it exalts the paper tiger reputation of the people at ValueCap. But then come to think of it, when de Minimis mentioned about government people using ancient data, I am thinking maybe the derisory treatment of the EPF people may be correct after all. But to infer that the people at Valuecap are brighter, I am skeptical. I am mortified by this inference when the achievement of Valuecap thus far is to incur a debt of RM1.5b. So the RM5b guna untuk apa? Please la, Dato Finance Minister,boleh kasi cerita ka? Then we have the RM7b package presented by DS Najib in parliament. It was presented as a seminar without it being debated. But how much has the RM7b been spent? Not more than RM600million. This sorry state of affairs suggest to me:-
11 comments:
SM,
From what I heard (whispers, gravepine talk), a whole lot of the so-called stimulus involves moving allocations from one project to another.
So, your second last most sentence would probably be bang on spot.
Probably a situation we had ben for quite some time now.
Thus the reason why some 9MP projects which could push some growth back in has not materialised.
With all the posts on Daim Zainuddin and Pemuda Umno, I had forgotten that you are an economics blogger too, Dato'.
And a good time too, while almost everyone else concentrating on the shenanigans in Perak, plus the possibility of Pak Lah `being forced to stay'... which show how this over-politicking situation is distracting the country from facing what is certain to affect EVERYBODY.
I don't know too much about economics, but the articles of how the credit crunch has affected lives in the US are alarming.
After reading this, my mind is troubled as it may seem those tasked with the job aren't up to it. That means we have to figure out ways to ride this out the best we can. And I mean "as individuals".
i just love Raison D'etre's "gravepine talk"!
whether accidentally on purpose (to quote yogi berra), it's wickedly freudian. ;D
Khazanah loses tons of money due to the lower value of their share portfolio due to the weak market >> Our leaders tells us.."its ok,,not a real loss...just a paper loss/temporary aja."
My shares in GLCs goes down..I tell my bankers "its temporary..don't worry..the RAV,the economic profits all in great shape."..my bankers says "No deal bro..top up or we sell off."
I go broke but the Khazanah guys still get their bonuses cos they met their KPIs.
But I am not too worried cos there's the stimulus package...but i see its all about Mega projects,lower tax rates,deferring housing loans.Wats it gonna do for me?And my employer, a multinational electronics company is talking paycuts,shorter hours..
Hey,wats a poor guy gonna do now?Can i bid for a billion dollar nego contract too?
Poor Guy blue
No problem. Semuanya OK. We will not go into recession as our economy is diversified. Buy local and our economy will grow 4.5%.
If you believe all the bullshit, we would not need to have any stimulus package. Far smaller countries including the Red Dot are pouring much more money into their economy than us. Only in Bolehland do they believe in miracles and Santa Claus. If even Toyota lost money, you think our Proton will survived ? Stop dreaming before you cannot get out of the nightmare.
Incredible
Too many interested and influential parties whose main interest is to protect either their own wealth or power...and in some cases both.Thus,their perspectives is quite different from most ppl in the street.Thus the addiction to Mega Projects that would gross up the GDP but involves only a small sliver of Malaysians..
And too many economist with western ideas churning out textbooks stuff...thus the talk about taxation,loans,lower interest rates etc.We are not as heavily geared as the Americans..So,interest rates go down..the guys with savings suffer>>the guys who borrows irresponsibly is happier.
By the way...wat would motivate someone with a very uncertain future earnings,3 secondary school kids and very little savings , to spend ?And wat about a pensioner with barely enough to sustain a reasonable lifestyle?
Possibly,they would be willing to spend on things that can give them future income i.e investments,training,small businesses..
Well..govt will raise Rm 30 billion in bonds and they will get EPF to subscribe...thats the conventional stuff.
Think out of the box a bit..Why not issue 10 year bonds at 10% per annum so all the guys with savings (the ones who are prudent and did not go on the binge and borrow money for unnecessary items)hv some nice above market steady returns.
Rasiah
Rasiah,
Good one for that last bit!
That's thinking out of the box.
But does the govt at hand, care or know what to do? Do those people have the grey matter to THINK OUT OF THE BOX? Forget about the will-power, as that only comes with true knowledge & understanding of the situation.
If they do - there won't be that much of the delays, in pushing through the rescue packages that they THINK that will work!
gwlnet
So far I have yet to be convinced that there is acceptable leadership on the economic front, (actually on all fronts).
I feel that these guys at the top have never been tested before and now are like deer frozen in the glaring lights of an oncoming car.
Hope they realise that the position comes with responsibility, not just the "belajar sambil melawat trips" and the throngs of people waiting to kiss their hands.
Thank God for the alternative media and bloggers like you. Reading the Star today, I thought that only every other country in the world had problems, not Malaysia.
Regards
Regards
Dear Dato',
It seems that Datuk Ir Mohd Othman Zainal Azim, the COO, of the PMU, of the MOF, headed by the PM2B, says that 76% of the 7B stimulus package has been spent. Using your logic, is it because
(a) The 38,000 project included some projects which were recategorized as stimulus projects from 9NMP
(b) Government has the money after all. Strange but true
(c) He is making a mockery out of U.N.ME
Regards,
Penjaga Tol Gambang
Rasiah,
Thats a great idea...let the govt raise the funds from the citizens with savings and willing to lend for the long term...a special "People's Bonds"..its not benchmark pricing but a very special issue for those with net worth of less than XXX ringgit and/or those 55 and above.
The govt will be paying about 5 to 6 % above benchmarks...but is it not better than to keep on going back to EPF for cheap money?
And,if the ValueCap guys are any good...or if the pump priming projects are worthwhile...a 10% finance cost is still feasible.
Anyway,all the negotiated projects (Mindef 4.5b,Penang Second bridge 4.3 b,Double Tracking 12 b,Gemas-Seremban 4 b among others ) gives at least 20% profits to the big guys>>>so why not let the small guys benefit too sometimes???
I guess the bankers will be the first one to shoot this type of ideas..and they have more MBAs then u have capatis..
hahaha..dream on Rasiah
So its the same modus operandi...just draw some circles and squares and rename it as Iskandar,ECER,NCER...
I guess the country needs a Chief Stimulator to manage(not to disburse or award contracts>>we got enuff of those guys) the approved Stimulus budgets; independent of the other budgets...and tasked to hv all the data,feedback collated and analysed.Also to ensure proper procedures are followed...
And pls no UMNO or ex civil servants..unless its Ku Li.
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