Economic Malaise: Will The Government 'Broke The Buck' ?

Hantu Laut

Reported in The Strait Times

MARCH 4 – The Malaysian ringgit could breach the psychological 3.80 to the greenback mark in the not too distant future, nudged by a deepening global recession and resultant flight to quality, plus a widening budget deficit.

Previously, few would have entertained the notion of the local unit tumbling back to 3.80 – the level at which it was fixed in 1998 during the Asian financial crisis before the peg was dismantled in 2005 – but it appears a distinct possibility now.

On the back of weakening exports and a growing budget shortfall, the ringgit climbed to within a 3.62/63 band a month ago.

Yesterday, it opened at 3.727/731 from Monday's close of 3.726/730. Full story here...

Read the one below:

Reduced corporate profits or losses would mean less income taxes going into government coffers, which among other things, would affect the government budget.New sources of funding would have to be found to finance the budget.Unless there is sudden upswing to the current gloomy global conditions the general economy will face serious contraction in the next few months which would affect the value of the ringgit.The ringgit may be traded at 3.80 to 4.00 range by 1st Quarter 2009 if no viable solution is found to stimulate growth. Read the full story here...

Read this one:

KUALA LUMPUR: The property market in Kuala Lumpur could depreciate as much as 10% to 15% going forward, while the prices of high-end condominiums in the Kuala Lumpur City Centre (KLCC) area may fall up to 30% in the next two to three months, said property consultant Rahim & Co. Full story here...

Now read this one:

Presently, there is notable forced sale and marginal decline in the prices of medium and lower scale properties in cities like Kuala Lumpur and Johor Baru.If the economic crisis deepen the next few months and continues into the middle of 2009 the prices of properties for all sectors would take a tumble.Upscale properties would fall between 20 t0 40% mainly in big urban areas.Full story here...

The Straits Times was right only few had the notion how bad things can get when the domino hits us. I was one of the crazy prophets of doom that have had all my forecasts and predictions hitting bulls eye.

Is the government still living in a state of denial?

They are going to announce the second stimulus package on 10 March 2009.Will have to wait and see what kind of package they have in store to rescue the economy.

Anything less than RM30 billion (inclusive the RM7 billion) may not do a good job. The problem is the government do not have the money and would not get enough money from its normal sources of revenue to finance its main budget, let alone finance the stimulus package.Its budget deficit is expected to grow to unhealthy level if the stimulus package could not revive the economy by the 2nd half of 2009. The longer the delay to implement the stimulus package the longer the sickness would stay.The country may be looking at unpleasant negative growth.

Unpleasant, as it may be, the government needs to borrow to finance the budget and the stimulus package. It has a number of options that it can take for its deficit financing.

1.Issuance of Treasury Bonds for domestic and international markets.....unlikely. Response from the international financial community may not be strong enough, which can downgrade the credit rating of the nation.

2.Foreign borrowing in foreign currency..... unlikely.Can become very expensive in the long run.

3.Liquidation of government assets..... not efficient in a downturn and possible diminution in value of assets.

4.Borrow from pension funds and government-controlled trust funds......very likely.The most efficient, cheapest, easiest and quickest way to raise the funds. Most likely candidates would be EPF and savings in ASN and ASB.

When the government announces the stimulus package it would be imperative and responsible on the part of the Prime Minister to tell Malaysians where the money is coming from.

Should the government decides to use money from EPF, the Board of EPF should not agree to a term loan between EPF and the government but demand for the issuance of medium term bonds with reasonable rate of interest.A term loan can be renegotiated and the terms and conditions can be varied from time to time by the lender (EPF) which is controlled by the government but government bonds must be paid in full upon maturity.

EPF funds were already badly managed giving poor return for many years and investments in low-yield government bonds or low interest loans are going to worsen the earnings of the fund.

Perak On A Roller-Coaster: Bar Council Sucks

Hantu Laut

It will be roller-coaster week for Perak and the drama will continue even after the court have made a decision. Pakatan and its belligerent Speaker will not give up.

If the court do decide in favour of the Sultan's decision and for the BN they will say the judiciary is corrupt and under the control of the executive.The President of the Bar Council Amiga Sreenvasan has imputed that the court would not be fair.

It has now become an interpretation of the law, more on racial sentiments, rather than the letter of the law. The worst culprit is the Bar Council.

Bar Council's vice president Raguneth Kesavan criticised statements made by the Perak police chief promising to take action against anyone who gathers in front of the state assembly building or taking part in an illegal assembly.

This half-past six lawyer said “The police as an enforcement agency must be seen to be neutral. Right now, they are perceived to be anti-Pakatan,”

What exactly is he doing by opening his big mouth? Isn't there a law against illegal assembly? Is he encouraging people to go against the law.Weren't he and his President Amiga Sreenevasan showing bias, anti-government and pro-Pakatan.As professionals why don't they wait for the court to decide the case, be independent like they wanted the police and the judiciary to be, before trying to show their expertise and misled the uninitiated. Looks like the pot calling the kettle black.

Of course the Bar Council can speak out, but in this case , they have shown extreme bias and questioned and interfered with the Sultan of Perak constitutional rights.They all know the Sultan needs not accede to Nizar's request for dissolution as the Sultan deemed he has lost the majority confidence of the assembly yet they insisted it be so.

As a lawyer friend once told me "Free advice is no advice".Unsolicited and free would be of worst value.

This irresponsible lawyer and President of the Bar Council said:

“We are very surprised the police is ignoring the Speaker,”

“Our institutions, that is the courts, the police, et cetera, are being tested and we can judge for ourselves whether they are acting independently or not,”

"There are serious doubts as to whether the police is acting independently,”

She observed that what is going on in the state “shows a total breakdown in relation to the structures and sanctity of the legislature”.

“It shows a violation of the role of the Speaker and an intrusion into the processes of the legislative assembly,”

Firstly, I would like to ask this learned person Amiga whether the law against illegal assembly (protests and demonstrations) has been repelled, suspended or abolished ?

From whom does she expects the police to take order from, the law, the government, Pakatan or the Bar Council?

Secondly, did the Speaker of the Perak Assembly acted in good faith and with impartiality when he suspended the new MB for 18 months and the new Exco members for 12 months and on what ground were they suspended when all the appointments were made by the Sultan? Isn't the Speaker going against the constitutional rights of the Sultan and try to shame him publicly by resorting to foul play to rebel against the Sultan's decision and reinstalled an illegal government?

Maybe, this Amiga person forgot that only majority of the legislature can form the executive, which is exactly what the belligerent speaker is trying to do. Using unscrupulous means to retain power.

If Speakers of state assemblies have the power to decide who the MB should be than all the sultans in Malaysia would become redundant.

BREAKING NEWS

PERAK'S VAGABOND ASSEMBLY

The belligerent Speaker of the Perak assembly has adopted the Indian's fish head curry Penang's style.He convened his assembly under a tree and the assembly have passed a vote of confidence in illegal Menteri Besar Nizar Jamaluddin and seeking dissolution of the assembly.There was no mention how many marionettes attended the wayang kulit.

Pakatan is rearing for a fight and a showdown.We can't see or hear the puppeteer.

Perak state assembly members held an emergency sitting at a vacant lot about 200m from the state secretariat building on Tuesday morning. -Picture by SAIFUL BAHRI/The Star ">

Perak state assembly members passing a motion during the emergency sitting held at a vacant lot about 200m from the state secretariat building on Tuesday morning.

How do you dissolve the assembly if the Sultan doesn't agree.You mean in Pakatan-ruled states the speaker can dissolve the assembly?

NIZAR THE COURT JESTER ?

Ousted Menteri Besar Nizar Jamaluddin is going to the royal court at the palace to entertain the Sultan with his request for dissolution of the Perak State Assembly. The whole idea is to play up the people's emotion and embarrass the Sultan.He knew he would never be allowed into the palace and this is exactly what he and Pakatan wanted and has planned all along.To make the Sultan look bad in the eyes of the people and to rile them up.

Is Perak dicing with emergency rule ?

ASSEMBLY ILLEGAL

Another setback for Nizar and Pakatan.The Ipoh High Court today declared the emergency sitting of the Perak state assembly illegal.It says the speaker has no power to call for sitting of the assembly only the Sultan is authorised to do so under Article 36(1) of the Perak Constitution.

Although, they know they have a weak case and are banging their heads against a brick wall Pakatan will continue to twist and turn the interpretations of the State Constitution to fool the people.They are more interested in the court of public opinion rather than the court of law. The charade will continue.

The Blame Game Continues

Hantu Laut

What lessons have we learned from high-profile crooks like Bernard Madoff and Allen Stanford ? Are they any different from the gangsters and organised crime bosses that makes their money in similarly illicit fashion. Are they worse than the rats,flies,maggots, cockroaches and all the vermin that humans find awfully disgusting.They can cheat you for yonks without you knowing it.They live the high life at the expense of those they cheated.

This is the where they talk so much about high moral, transparency and accountability but are now caught with their pants down. The West, themselves, rotten to the core.These are the crooks and scoundrels of the financial world, the money mincing machines that not only bankrupted their own companies but other innocent individuals and countries.

Below are some articles that decried the unpleasant and unconscionable action of those people whom we placed our trust in.

Are executives villains or morons?
In the past few months, we've been riveted and disgusted by the exploits of scamsters like Bernard Madoff and Allen Stanford (characters who, if they didn't exist, would have to be invented by Tom Wolfe). It's both easy and convenient to hold them up as the ultimate symbols of the just-ended boom. But we shouldn't. While there was some crime in the mortgage industry, law-abiding, respectable, upstanding citizens caused the overwhelming majority of financial losses suffered thus far. Skeezy money managers and mobbed-up boiler rooms didn't create the economic catastrophe. Read more....

PHOTOS:

Who Is To Blame?

There are plenty of people who contributed to the sad state of our economy. But when it comes to bad decision making, these seven folks arguably deserve the bulk of the blame. (Want to add to this hall of shame? Follow the e-mail link at the end of this gallery.)

Is Wall Street Evil?

Americans have always hated the moneymakers, rather than hate themselves.

See Who's Talking Now

Hantu Laut

He was one of them, who, hardly a month ago, kept saying no recession will come to Malaysia.

Second Finance Minister Nor Mohamed Yakcop has woken up from his slumber and came to his senses that the nation is indeed in trouble.However, he doesn't know how serious is the trouble and what the government intends to do other than saying Malaysians must stand united regardless of race, religion, political or ideological differences as only through a united stand could the future generation reap the benefits.

That's a political talk not a solution to the economic problems. Read it here.