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Sakmongkol ak 47

Tuesday, 15 October 2013

Looking at the Deficit Budget differently.

I propose we look at the coming budget from a different angle, let’s get not trapped into discussing the budget type- whether surplus or deficit. It will be deficit anyway. Because of that, PM Najib sensitizes himself to Fitch Rating- why respond if international ratings are irrelevant to Malaysia’s credit standing?
Because from now on, it will become costlier for Malaysia to borrow money from external lenders who will be followed by internal lenders. Imagine the amount of debt servicing quantum which are absorbed into non-productive activity. It will drag down economic growth.
We get worked up at the type of budget. If its a deficit budget, we attacked the government on a number of points. We are not going to take that approach because we already know the drill. We know about the being Greece argument, burdening the next and future generations, we are going bankrupt and so forth.
I will even allow this government to spend its way to destruction- for if it comes to that, i.e. the government spends out of control, it will come to a stage, where it has to cut back. It has to downsize and with that it will cut back on investments, it will cut down spending.  it will shrink. Isn’t our aim, is to see this government fall? It will fall because it’s a profligate and irresponsible government spending OUR money recklessly.
The shame is in the spending itself not how the spending is made possible. We know how it’s made possible. The government takes in revenue and borrow on top of that. How does it spend this money is more important.
If the government takes in RM100 and borrows another RM50, taking from us a total of RM150, but gives us in return something valued at RM100, then we have the right to get angry. Where has the RM50 gone to? Judging from the 2013 Auditor General’s Report, the RM50 has gone into the pockets of the little and Big Stalins and Napoleons. Second, on what has the RM100 been spent on? On something good for us or financing the leaders ego trip?
We must remember this: government can spend or invest only what it takes away from its citizens and that its additional spending and investment curtails the citizens’ spending and investment to the full extent of its quantity. you take RM250 billion from us, are you giving us back RM250billion wirth of goods and services? What the government takes away from us, it reduces the same amount of money that could be made available to the real wealth creators- the workers, the private investors, the entrepreneurs. The government does not create any wealth.
These are more important issues in addition to that deficit part of the budget.
We should be worried about how the government spends OUR money, not so much about the declared deficit. It’s not a big deal if the deficit is 4.5% or 4%. Last year the government took in RM208bn as revenues. It’s spending 251bn. to make up the difference, it borrows 43bn.
After reading the Auditors Report, it is plain, that corruption, abuse, embezzlement and naked pillage has permeated all levels of government. This is a government that has not got the political will to stop all these. We haven’t got the culture of hating every form of wrongdoing. We need to develop this culture of hating wrongdoings and not as a friend suggests a culture of a fear of being audited. Indeed what came out from the Auditor’s Report- people simply don’t fear audit reports because it’s read by a wimpy government and further read by a malleable and forgiving public.
We now know the amount of public debt is huge. By the end of this year, we think it will be around RM546 billion- which should breach the 55% of GDP limit. We take into account in addition, the value of the government’s contingent liabilities or the off-balance sheet spending, that include the guarantees on the loans GLCs and selected companies take, which amount more than RM100 billion. Add together, the amount of public debt is big.
We are worried and concern. We should be but not because we love the government. If the government spend like a crazy bloke, we won’t stop him because we are actually looking at a government that spends itself into destruction.  It can’t spend indefinitely so it will have to cut down on employment, on wasteful projects.
So , whether government spending is in deficit, balanced, or in surplus is immaterial. The shame is the spending itself. When governments spend they’re by definition extracting limited capital from the private sector, so the problem is the spending, not how the spending is made possible. It spends irresponsibly- and this why we must attack the government. This is a profligate government spending with taxpayers’ money.
So, I am asking readers not to be too absorbed into dissecting the amount of public debt or the declared deficit- it shouldn’t bother us that we have a RM546 billion deficit, rather it should horrify us that our federal government collects 250 billion per year plus 40-50billion borrowings plus the national debt. What that number signals to us is that our federal government collects way too much in the way of revenues, and in spending those funds plus RM500 billion in debt and RM100billion in contingent liabilities, they are  foisting  cruelty on us. Yes, this cruel and tyrannical government robs us of capital that, if left in the private sector, would support real economic activity Heavy government spending, whether through revenue collection or deficit financing means less capital for the companies that employ us, enhance our lives.
You see- the deficit isn’t the RM40-50 billion the government tops up by borrowing- the deficit is the entire budget itself. Didn’t I say the government doesn’t create wealth? It creates nothing. So if this year, the government presents a budget of RM250 billion, this 250 billion is the DEFICIT. Since the whole RM250billion is taxpayers money, what the government does is spend what it borrows from the consolidated fund.
Because of that- our focus should be on whether we get value from the spending and where the government spends it on.


Tom,  15 October 2013 at 10:49  

"After reading the Auditors Report, it is plain, that corruption, abuse, embezzlement and naked pillage has permeated all levels of government"....
Ah, Dato, it is only your perception and everyone else's. The MACC head has already made it clear, in effect all these are stupidity and negligence and their is no law to punish as such. What great wisdom! So if you must steal, steal big because it is beyond the capability of MACC to pursue as it's only stupidity. But RM2500, even without proof, you get to fly out of their office window.

Anonymous,  15 October 2013 at 15:37  


that why law maker always the winner.. nothing new.

even throw a sandal also got 1 year of jail.. what else you could say about?

with the PAC... detention with out trial? easier to let those law maker to crack down who ever plan for bersih 4.0 or black out XXX. get some funding budget to build more detention hall...

walla 15 October 2013 at 18:28  

It's not just how the government spends your money. It's also how it has been investing it.

In Petronas emerging as Canada's biggest foreign investor with over Rm1 Trillion (a thousand Billion) in a shale gas and complex project, one can ask a pivotal question: why did Japan Petroleum and other big players not initiate the project on their own earlier if it's really so feasible?

Because of the 30-year timeline of this project, it is critical for parliament to ask whether professional due diligence has been completed before the ink dries next year, especially in the light of the potential deferment of other projects like the Tun Razak Exchange where millions have already been spent and committed to no avail, or forays like FGVH going into the volatile london property market.

Your uneasiness about how the government spends and invests your money is not going to be misplaced when you realize that pushing through to complete the MRT project will imply the government intends to remove more fuel subsidies which in turn means TNB will have to raise its tariff which in turn will result in the price of everything going up twice as fast since both electricity and fuel are needed to power an economy.

Furthermore, the effectiveness of an MRT is only as good as the locations of the lines it serves in combination with feeder transport services at its terminals. All this has not been sufficiently debated in advance of financial commitments.

What we are seeing here are a series of things: one, the government has been spending your money with little to show in terms of triggering the private sector to self-generate sustained economic activity; two, it has been working overboard to print more ringgit thereby weakening it beyond liquidity optimized to investment demand; three, it has paid scant attention on the critical importance of discipline and competitiveness which are focal drivers of real national development as opposed to mere construction projects which are asset inflationary; and four, it has been showing a near panic profile in pumping rakyat money into high-spin projects without proper evaluation of their potential returns that can stand real operational scrutiny.

Given such a record, the conclusion is clear - for all the pemandu jingoism, the government has not been exercising risk management of public funds at all.

You already conclude as much in the annually reverberating and grating exposures that visit with each AuG report.

walla 15 October 2013 at 18:28  


If a government cannot even handle such a thing as public sector corruption, what hope do the rakyat have it won't blow their future away, especially when the public sector in question is already bloated beyond recognition, and cost of living is rising at an alarming rate for the millions of private sector epf-holders who are nursing their miniscule savings which values are reducing every second the same government is running the country into the ground?

We are at this stage today because the course of our national development was diverted to serve a political agenda disguised as a socio-economic solution. Such an agenda might have worked if its handler was just, clean, efficient and trustworthy. That it has played shamelessly with public funds shows clearly it has not even one of those qualities, including the trust that is fundamental to any faith that is made official for political expediency.

Without those qualities, no handler of a political agenda can fashion out a viable socio-economic solution. So much of what has been shown in society these days reveals as much the failures in social development inasmuch economic advancement.

The situation today is as bad as you can get, given all the pre-GE13 promises made now dashed to smithereens right before our eyes.

Our society has been socially balkanized, destructive as it already was with all the mindless chauvinism that came from officially propagating rightwing racialism. Now the general economic distortions between the elites and the masses will rend the rentier frontier even more.

And the government's judiciary wants to talk about peace and harmony as if social mores and mindsets can be locked in deep freeze for fifty years? If anything, their snatching such a straw is telling of their own mindset.

At this rate we will be backward for the next hundred years, propelled by the vicious cycle of downward spiral in everything needed to bring people together and revive the nation.

Be assured, things are not going to sort themselves out in time. If it were so, we wouldn't be having this discussion today.

The politically unprincipled diversion from a natural and evolutionary course of economic development is what tears the fabric of our society today. No budget is going to solve that.

walla 15 October 2013 at 20:17  

oops..adjusted for thirty-year inflation ;P

SamYap,  16 October 2013 at 00:05  

Dear Dato and fellow readers,

IMHO there isn't much more that anyone need to slice and dice the government budget. Dato Sak has explained it quite adequately.

The important point to note is whether this article or a speech about this article would be understood by the 47% electorate who voted for BN in GE13. I suspect that quite likely 10% of the 47% will understand but they would not be concerned as they have their agenda in voting for BN - some are BN diehards, some have vested interests because of their business or work, some because of family ties and so on.

The other 90% of the 47% would either be ignorant and/or filled with irrational fear about race and religion.

We cannot underestimate the power of the darkside of the race and religious divide policy. It is a very simple strategy and yet it is powerful enough to appeal to the dark side of human nature.

In the bigger picture, its about how we can get the 90% of the 47% electorate to read and understand Dato Sak's article and be concerned enough about OUR country's future - NOT the Melayu's or Cina's or Indian's future - BUT OUR future.

Politics, whether in Malaysia or the UK, or the USA, or even in China - is about winning the hearts and minds of the people. Thus, given the uneven political field, its Pakatan's task to heal the racial divide and this must done as fast as possible. If this is not done, then UMNO-BN will rule until the country runs out petroleum revenue. When finally the curse of oil is gone, only then would it be likely that we will see the beginning of the end for UMNO-BN.

I hope that Pakatan can at least do their best in the states they rule to begin public programs and introduce state policies which will foster better relationship among the races.

That is the factor which UMNO-BN fears the most.

The National Service etc are all bullshit. If UMNO-BN really wants to foster closer relations amongst the races, they can begin by taking stern action against the so-called right wingers like Ibrahim Ali etc.

Yes, get the races to live and work together in true harmony, will spell the end of UMNO-MCA-MIC-Gerakan.

Anonymous,  16 October 2013 at 01:40  

These are the reasons & why this corrupted UMNO/BN government of clowns,thieves & robbers must be kick out & punish!

Anonymous,  16 October 2013 at 08:02  

This may sound ideal and impressive but the reality on the ground is not the same.Look, that stupid Anwar was making bad remarks on Khalid, the Selangor MB because Khalid is being prudent and cautious about spending rakyat money.Khalid has the experience in managing money as he was once the boss for PNB.PR would have lost Selangor had Azmin Ali was the MB.So it is about who and who in PR actually for PR to stay relevenr.We don't need inhouse fighting.Abwar remarks is unwanted~ SA

Sam Yap,  16 October 2013 at 11:47  

Dear anon
16 October 2013 08:02,

We need to inject some idealism into todays politics. We need to set ourselves a higher bar of standard, so what then would be better if not some ideals. My classmates and I had dreams of being astronauts after watching Armstrong land on the moon in 1969. No one made it to be an astronaut. But today, many of those classmates are successful in their own chosen fields.

Similarly with Malaysia, why settle for a second rate government just because it is better than third rate UMNO-BN? Why not aim for a zero-fault tolerance government although we know in reality there isn't such a thing as complete 100% good governance.

We need to set a high standard.

An educated guess will tell you that even a small percentage of improvement in race relations in our country will bring about the downfall of UMNO. It is very obvious, but sometimes we may not see the woods for the trees. A couple of examples:

"Allah": does anyone here really believe that the judgement was fair or was it politically tainted? This issue about the word Allah is pounced on by UMNO-BN to agitate the muslims and non-muslims. A simple ploy to further divide the people.

Our country has become an international laughing stock. Do you think the UMNO-BN politicians care? They don't care, no sir, they would say "up your's". For them, its all about the power and the country's wealth which comes with it.

Secondly, the ashes of the old man, Chin Peng. Do you seriously think for one moment that the majority of Malaysians of Chinese descent is really bothered whether those ashes are important to them? Bloody hell,some of them in their late twenties didn't even know who was this old bugger. They are more concerned about paying off their credit debts and the cost of the latest Samsung Note3. So, what did UMNO-BN do? They made a big hooha issue about the ashes of a dead man playing hard on the fact that the fellow was a Chinese. The whole idea is to stir shit among the Chinese and the Malays.

And lets not kid ourselves about Pakatan politicians that they are fighting to "save the country". Save it from who? Save it from what?

All of us know who ... UMNO-BN.

How about what? This is in fact the crux of the opposition agenda - the gain power to rule over the country, which of course means to control the wealth of the country.

And what do you think Pakatan will do with the wealth? Enrich the citizens? That brudder DSAI and family will refuse a chaffeur but drive himself to Putrajaya to work? If that happens, cows will fly.

The reality is this, the Pakatan politicians will enrich themselves first. The question then is: how much?

If they are willing to share with the people then we will get to see a more even distribution of wealth. We will see a country which has a future for its younger generation.

And if Pakatan fails to deliver but instead is seduced by the curse of petroleum, then we kick them out and give BN another try.

That's the principal reason why we need at least a two party system.The BIG problem now is we do not even have the choice of whom we want to govern, divided and fractured so badly is the Malaysian society.

There is an implicit covenant between the pro-Pakatan electorate and Pakatan. Its simply this, do your job well which means share the wealth or get out.

At the moment, the politicians in UMNO-BN are not sharing. They have evolved from politicians to MINERS ..... they keep fighting over the country's wealth - Hey!Petronas is mine, hands off!, Hey! Get out, TNB is mine!, Hey! Stop don't grab, Syabas is mine!

UMNO-BN miners are now in a giant mine called Malaysia Bhd. They are mining a hole so deep, in the end Malaysia Bhd will collapse. And we, the mine workers will die with it.

(That is what Dato Sak's article is all about.)

As for bradder DSAI, and his stupid act ... that we will talk another day. Right now I am exhausted.

Anonymous,  20 October 2013 at 05:04  

With respect to Sak, Walla & fellow readers,

It is safe to think along the line, Petronas' investment in Canada has connection to Taib's daughter married to a Canadian... SO the domino effects awaiting. It common knowledge who the advisor is. The umno leaders' proxies in Petronas ? They have made themselves indispensable through proxies, but the voters in the coming election of umno hold the trump cards. Only those with courage, progressiveness, clear conscience to vote with dignity and vengeance

Enough of going back to the vomit of the corrupted indispensable dinosaurs.

It is the beginning of a new and a long journey for the reawakened thinkers, voices and working class Malaysians, sigh.. hard knock. Gotta get our acts : resources, brains, conscience, looking out for our neigbors in the workplace, next door, since you water the nangka tree, you can adopt it
and welcome to enjoy its plentiful or moderate harvest, too :)

So put our good acts in concerted efforts, better and faster.

Also let's speak up against individual companies and their franchices having dominance over the market, to barricade price fixing and control commodities, and services and navigate our dependence on them. Better democratic choices and awareness of the consequences of our choices is crucial.

I want and advocate MANY companies, medium, small and traders consisting of many hardworking individuals from ground zero competiting Alongside each other, to navigate wealth and opportunities to them, back and forth to develop Malaysia further. Stupid to build the bridge of nowhere.

However, take percautions to eliminate the loopholes in Free Trade. How free is free trade as expounded by Liberalians. Are there no capiltalist proxies amongst them ?

Case study, look at China, America, India, Singaore elite govt leaders, and UMNO - BN hahaha. Free Trade can still be navigated by proxies to those with power, know - how and the social media. Even religion when anyone with materialistic and self entitlement mentality get into leadership or membership.

Yet the reverse - integrity, humility, accountability, progressive mentoring to and from, etc will bring good health to the members and all.

Another clear example is the recent partial shutdown of the US govt, is the insurance companies are overriding in - in droves to enjoy the brink of disaster of the American people.

The bottomline is the US budget deficit has NOT be addressed, hopefully, the shutdown is a history. It is disastrous - the domino effects are horrendous to all level of Americans, to Malaysia and worldwide.

On homeground, the MIC minister of health is already patronizing the health insurance scheme for Malaysians. He has neglected his main massive duties and accountability which got him elected in the first place ( was he elected ? the phantom voters ? ) Money, sentiments and corruption are at work in diversified tangents.

See the hands at work and the proxies placed there in Petronas, weak leaders etc certainly not stupid as some people think they are. Shed the stereotyping.

Any corrupted leaders are actually first class manipulators, shrewd and smart ponzis and their good neighbors are mahathirs, taib, their proxies in mca, mic, etc.

Until then wishing you all be blessed with good health, fresh vigor to write, happiness and safety. Cheers !

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