Tuesday, October 26, 2010

What Stimulus?

Hantu Laut

Why would a naval base be adorned with chandeliers,fancy wall paper and other items of luxury? Read the (AG) Auditor-General's report here. Would the Chief of Navy be upstanding and explain why he needs such pomposity.

Indeed, a very sad state of affair, money that's supposed to stimulate the economy being spent indiscriminately without due care and attention.

Even more deplorable and beyond comprehension is the
AG's report here. Paying for goods that have not been delivered and accepting goods of inferior quality. It would not be too far-fetched to think that there may be element of corruptions.It should trigger the MACC to investigate.

This deplorable state of affairs will stymie Najib's chance of recovering lost ground.It's about time the PM use the carrot and stick approach to rehabilitate these good for nothing civil servants, and not the least, some of his ministers.

We need to spend to stimulate the economy is true but prudence should be the core element.Our debt to GDP ration, at the moment, is still manageable but drastic measures should be taken to bring it down.This kind of wastage if left unchecked is going to bankrupt the nation.

The AG reported current debt to GDP ratio of 50 percent of mostly domestic borrowing is a sign that our borrowing is increasing.
Malaysia has reduced it foreign debt quite substantially which means we are not at the mercy of foreign currency exchange.However, the increase in total debt is not good sign.

The higher the debt ratio is, the more likely we are going to default because we have borrowed too much relative to the ability for us as a whole to repay.More reflective is the percentage devoted to debt repayment, 5 to 10% of GDP is the acceptable ratio, anything more means the country is heading for trouble.So far so good, we are still in the green zone.

It may come as a shock to you that the US and UK has almost 100% debt to GDP ratio yet still got AAA ratings.These two countries have unassailable institutions, political stability and low sovereign risk.

Unnecessary spending invites inflation which is the percursor to recession.Civil servants do no care how they spend because it is not their money, it is other people's money.

Another, very sinful wastage is the government giving of free computers to villagers.Do the villagers really need such computers to make them more knowledgeable or they would rather exchange it for cash and some people in government would be making tons of ill gotten gains from the excercise?

We, the taxpayers are the suckers.


Anonymous said...

It reflects badly on the quality of our leaders. There seems to be no control at all on how the money is spent. Despite the many reports by AG nothing seems to be done to rectify the misdeeds. The perpetrators continue to spend as big commission awaits those who authorize the payments.
Pak Tua

SM said...

Bro HL,

You sound surprised again?!

2020 may be the year when we finally go bankrupt!