Why I am disgusted by the RM60bil stimulus package by Vijay Kumar Murugavell

Please allow me to share this very well written commentary by a friend on the recent RM60 billion stimulus package aka mini budget announced by Najib Razak, our Finance Minister, Deputy Minister and soon to be Prime Minister. (God willing. Hey, you don’t laugh. HA! HA! HA!)

I am a little bit busy with work and I have not really look into the details of the ever stimulating mini budget. Let’s see if I am labourious enough to write one later, just like Vijay did.

Why I am disgusted by the RM60bil stimulus package.

by Vijay Kumar Murugavell

The stimulus package is not transparent enough to comment on with regards to if it would work or not, but RM 60 bil is not enough to stimulate a RM350bil economy that relies heavily on exports and FDI, its like trying to boil water in a swimming pool using an electric kettle.

We are running a budget deficit -in short spending money we have not earned yet to finance this stimulus more so when our earnings from commodities are on a downward trend.

It is also foolish to bail out national automaker Proton, we lose far more disposable income nationally than Proton can hope to provide in terms of employment
and other economic spin-offs. A car industry for a population of less than 30 million such as ours is simply not viable, the only way it survives is by unfair competition.

Proton is an anachronism in the automobile industry and it’s not going to survive over the long term,” says Graeme Maxton, Asia analyst for consultancy Autopolis in Hong Kong.

(Source: Business Week)

The government also wants to employ another 63,000 people to an already overstaffed,inefficient and sluggish civil service. You cannot provide employment for the sake of employing, the former USSR tried this with catastrophic results.

This RM60bil that represents about 9% of our GDP. This will push our fiscal deficit from the current 4.8% to a whopping 7.6%. Most of the spending will be on loan guarantees, infrastructure and public sector expansion with nary a sign of tax cuts that are the hallmark of most stimulus 101 packages with the view to encourage growth.

Only RM15bil or a quarter of the budget is in a form of direct fiscal injection. A cursory look at some details reveal items like upgrading firemen’s living quarters, toilets etc and other dubious items which makes the layman on the street think what in tarnations have they got to do with the term “stimulus”. These should have been addresed in the main annual budget.

To make matters worse they have cut interest rates, this could push us into deflation, which will be harder to come out of than inflation. Our outgoing PM’s statement that our economy “is doing quite well in terms of the economic fundamentals” offers little comfort, its akin to a doctor saying that the body is healthy without mentioning that severe dehydration could kill irregardless of fundamental health.

Inflation in Malaysia is at a 27 year high but the government of the day tells us that everything is alright – they must have been taking economics lessons from Mr.Bean.

When the Government increased fuel prices by 41% at one go last year citing global oil prices, it caused a domino effect of inflating a wide spectrum of consumer goods, then dragged their feet when it came to reducing the price of fuel when global prices came down, the government then blamed traders for not reducing their prices when fuel prices were lowered, anybody who has ever read an “economics for dummies” publication will understand that the price of goods will rise in tandem with the cost of raw materials but not necessarily go down after raw materials cost are reduced.

Anwar Ibrahim tried to point this out in a debate with Information Minister Shabery Cheek last year, among others he mentioned that the prevailing dizzying high oil prices at the time had nothing to do with demand but was speculative in nature and expects the markets to adjust oil prices downward after a certain point.

On hindsight he was absolutely right.

After global oil prices came tumbling down as predicted, we were still paying more for petrol- not in tandem with plummeting global oil prices. The earlier 30 sen promised subsidy is abandoned and just when comsumers thought that they could gain if oil prices plummet further, Minister of Domestic Trade & Consumer affairs Sharir Samad was insultingly mulling “floor prices”. Sharir is also reported to have said that if drastic cuts are made suddenly petrol stations and dealers will suffer, on the otherhand it was perfectly fair for them to reap bumper profits when they increased prices overnight.

Baffling ? Not really- allow me to share my simple minded theory:-

Who are these petrol station owners ?

The vast majority of petrol stations in the country are owned by UMNO members, their cronies or proxies, who (probably) contribute much to UMNO war-chests and … have sway over how UMNO delegates vote. The leadership quite likely do not want to offend this group, more so when UMNO party elections are in progress. Its not about the suffering rakyat its about immediate political survival. Of course not to mention finding surplus at the Federal Level to partly finance an ill conceived expansionary budget. They just hope that the people will forget this come next general elections.

Its a complex issue that many don’t trust our inept cabinet to discuss. They can’t even come up with a tenable solution in the case of the 14 Mercs used by Terennganu exco who disregarded Treasury policy on official cars. Refer to Lim Kit Siang’s post on this.

The following chart shows the trend outlining the gross domestic product of Malaysia at market prices estimated by the International Monetary Fund with figures in millions of Malaysian Ringgit.

(Source: Wikipedia)

Rapid growth was achieved partly through privatization of inefficient state owned enterprises, thus subjecting them to commercial pressures and forcing them to better utilize their resources. Many deals were done behind closed doors and put through rather quickly. In one example Khazanah Nasional alienated shares in DRB Hicom to Mega Consolidated. This led to such deals being labeled mega projects.

Thus we can see that on the long term trend the Ringgit (MYR) steadily weakened against the US Dollar amid runaway inflation and artificially suppressed wages.
I am truly wondering what our outgoing PM meant when he said recently that there was not much fluctuation against the US Dollar when there is a steady decline since 1980.

In the recent stimulus package a total of RM10bil or a whopping one sixth of the total intended sum awarded to Khazanah nasional. The earlier RM 7bil stimulus widely criticized as inadequate has drawn further ire after it has been revealed that though it was announced last November, about RM5 billion worth of projects will begin only around June. The government recently disclosed that these projects went to Class F contractors who are largely linked to Umno.

On top of being ranked a shameful no.132 in a freedom of speech index, reports from Amnesty International and Transparency International are not very flattering either, these reports are perused by most foreign investors before deciding on whether to invest or not. Ignore this at your own peril.

Our largest trading partner, the US conferred accolades on Bar Council’s Ambiga Sreenivasan for her efforts in promoting human rights while
new US secretary of state Hillary Clinton gave Malaysia a miss during her recent Asean tour. This alone says alot about how our largest trading partner views us.

I am willing to wager that if the BN govt is toppled and Pakatan implements measures similar to Penang’s CAT (Competency, Accountability and Transparency) government, foreign investors are likely to come in by the droves.

It is pointless for the BN government to churlishly blame the local economic malaise on excessive politicking that they started in the first place, then alternatively shrug that its a global meltdown after denying repeatedly that we have a problem.

In fact I put it to the BN government that they are using the global economic meltdown as a shield against their shortcomings, had it not happened I would not be surprised to see regional economies chugging along while ours lagged behind.

While Anwar tried to bring up declining FDI’s November last year, he was snubbed by speaker Ronald Kiandee, Anwar contended that while FDI’s of our Asian neighbours were increasing, ours were declining citing ‘United Nations Conference on Trade and Development Worlds Investment Report 2008’

At that time Najib who holds the Finance Minister portfolio was on a sabbatical to Peru. No one in the Government showed any interest or urgency. The government ought to ask itself why Indonesia overtook us in terms of FDI or why foreign tourists fly from Singapore directly to Thailand giving Malaysia a miss.

I offer some unsolicited advice to the government of the day, these of course do not include macro economic measures which are better left to competent
economists :-

1) Review all lop sided agreements with IPP’s, water , electricity and toll concessionaires.

2) Scrap the glorified summer camp scheme known as National Service and divert the money for scholarships.

3) Barter trade to partially circumvent commodity speculators, for example we can exchange our palm oil with Saudi Arabia for their crude oil.

4) Abolish duties on imported items that protect inefficient local industries and stop subsiding industries that swallow funds but do little for our economy.

5) Call for open tenders when awarding contracts, so we can do away with over inflated prices charged by crony companies that have no expertise in the first place.

6) Unless you can prove that our country is in imminent danger of invasion, sell the scorpene submarines and other military hardware then use the proceeds to upgrade public transportation.

7) Include opposition controlled states in the Federal Tourism MOU’s, allocate retraining resources for those retrenched in the electronic sector for tourism careers, tourism has a multiplier effect on other sectors. There is much to be done to woo foreign tourists. With declining FDI’s this area becomes more important.

8) Retrain a segment of fishermen to do fish farming, to stabilize the price of this diminishing resource, preserve marine ecosystems and save on diesel subsidies.

9) Stop bailouts but instead offer incentives based on performance.In cases where bailouts are justified strict conditions should be imposed.

10) A total moratorium on personal income tax for 2 years- yes tax cuts are the most common stimulus to increase spending and domestic demand.

11) Coupons for unemployed and those living below the poverty line to purchase essentials for basic sustenance.

12) Do away with internet provider monopoly, Streamyx service is so bad that businesses that rely on the wired world have had second thoughts about setting up shop here.

The general population cannot be blamed for seeing this as another bailout of government cronies who are inefficient and monopolistic, with little direct benefits for the man on the street.

Vijay Kumar Murugavell

ps: Vijay Kumar for Finance Minister, anyone? :up:

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36 Responses to “Why I am disgusted by the RM60bil stimulus package by Vijay Kumar Murugavell”

  1. NoktahHitam wrote on Mar 12, 2009 at 6:48 pm

    Cannot cannot. I be the Finance Minister, Vijay becomes my think tank. I will create my own cronies and Vijay will have some shares.

    In case Vijay’s idea failed, I’ll shift the blame to him. LoL!

    ps: Nicely written. Laymen can understand.

    Some points to add
    – Retrain agriculture segment. Teach them fish-farming and effective planting.
    – Focus on agriculture, everyone needs to eat even at bad times.
    – Focus on IT. Since 1997, the IT boom has never cease to stop. (IT, not electronics).
    – Use e-Perolehan for tender exercise for ALL government sectors.
    – Hunt down middle-man who hikes prices and never seemed to care about bringing it down.
    – Work from home incentives. Parents need not send their kids to daycare centers, stuck in bad traffic or commute daily. Saves more household income.

    That’s it for now.


  2. Azer Mantessa wrote on Mar 12, 2009 at 6:51 pm

    Vijay Kumar comment on this issue is not bad … not bad at all.


  3. empyreal wrote on Mar 12, 2009 at 8:19 pm

    from an economist pov, im afraid that i have to say that he doesn’t seem to know what he’s talking about.

    for example, the correct thing to do in a recession is for a gov to carry a deficit. that boosts demand and staves off deflation. you don’t save during recessions and spend during booms – you’d get deflations during your economic crises and high inflation during your periods of growth! if he reads those ‘economics for dummies’ as he said in his post, it’s labelled under keynes. that’s why every single country in the world affected by a downturn is running a deficit.

    while we would all like the removal of tariffs on imports – as consumers – it would actually make the economy much worse, rather than improve it. imagine all those money which would have been spent on local goods (hell, local cars bad as it is) going overseas. one car cost say a few thousands. multiply that by the amount of protons bought a year and you’d have the extra amount of cash flowing OUT of the country. not to mention we’d have a load of engineers out of jobs when we’re trying to reduce unemployment.

    personally, this car business is just bourgeois sentiments. it’s the “i want a new foreign car” argument. people just don’t think how buying a foreign car puts the economy out of a few thousand ringgit and a few fellas out of a job.

    on a non-soldierly note, i don’t think it’s wise to ‘sell off’ our military equipments and only buy them when war’s near. ignoring the fact that it doesn’t take 45 seconds for naval yards to produce subs or 30 seconds to produce conscripts, it might not be wise to hand over million dollar ships to untrained crew.


  4. Zephyr wrote on Mar 12, 2009 at 9:22 pm

    I dun know whether Vijay is good enough to become the FM but I know a lot of ppl can do better than those pathetic goons up there.

    P/s : In Mareysial, the fastest way to get rich is not study hard :mrgreen: , work hard :mrgreen: or kena lotery 😎 , it is becoming politician & make funny stuffs in newspaper everyday for us to laugh. 😆


  5. mob1900 wrote on Mar 12, 2009 at 9:47 pm

    And you get a cookie for pasting Vijay’s letter on your blog, Bonkerzs! 😛


  6. alone wrote on Mar 13, 2009 at 12:40 am

    omg.. damn the croniysm 😡

    a kid asked me a question :

    “why there’s very rich people when there are a lot of poor people in this world?”

    well. it makes me think a lot ❓


  7. bongkersz wrote on Mar 13, 2009 at 12:40 am

    Ah, talking about Keynes. Looks like the Malaysian government is very Keynesian in its approach eh? Which advocates deficit finance and increase public spending in order to get out from recession. Too bad, Keynesian demand deficiency model is not appropriate in the context today’s recession.

    We need a balanced budget, controlled expenditure and cutting off unnecessary wastages. Increasing public spending is not going to solve the problem which is not there in the 1st place – lack of demand in the market. The word’s economies are not suffering from the lack of demand! What we need is a sound fiscal and finance discipline.

    I am suprised not much emphasize is given to tax cuts, which is a very important ingredient to curb recession.

    Continue again later. I’ll let Vijay to fend for himself. He sure loves some good discussions.


  8. haritz wrote on Mar 13, 2009 at 3:13 am

    Perak have the first ever Indian Speaker and now the first ever Indian Finance Minister.
    Nothing wrong with that. 😎


  9. bongkersz wrote on Mar 13, 2009 at 9:45 am

    Lot’s been talked about the reviving agriculture segment, especially since Abdullah pledged to make agriculture one of his many ‘missions.’ As usual, lot of hot air.


  10. bongkersz wrote on Mar 13, 2009 at 9:47 am

    Yo bro! How are you! Damn I forgot about you.. when I was in KL for a short trip, else should get ‘connected’, sit down for a cup of coffee with you 😀 😀 Don’t have your no also.


  11. bongkersz wrote on Mar 13, 2009 at 9:47 am

    I did? 😛 Thanks Mobbie! 😛


  12. bongkersz wrote on Mar 13, 2009 at 9:48 am

    That’s a tough question to answer.


  13. alone wrote on Mar 13, 2009 at 10:23 am

    sure it is.


  14. Vijay Kumar Murugavell wrote on Mar 13, 2009 at 12:02 pm

    Dear Empyreal,

    Thank you for taking your time to read my article and for your comments.

    JM Keynes could not have imagined many of the economic conundrums that exist today, just as Archimedes could not have imagined antigravity, quantum mechanics or superconductors.

    The fact that many governments follow set rules has led to endless cycles of bubble and bust, to stop this we need to build on new foundations, ever heard of the saying “its futile to do the same old things expecting different results” ?

    The government is using the current crisis as an excuse to do reforms that are crucial to our future survival.

    4 possible causes of deflation

    Decreasing Money Supply
    Increasing Supply of Goods
    Decreasing Demand for Goods
    Increasing Demand for Money

    Sorry to oversimplify, but to me :

    Deflation = reduction of credit and money supply.
    Inflation = increase of credit and money supply.

    The government’s efforts to re-inflate money supply are right now “mencabar” an over-indebted sceptical consumer. If the government wins, we get inflation. If the consumer wins, we get deflation.

    Or another way to look at it is : If you have high sugar levels in your blood, you can lower it by insulin,but too much insulin, and can go into hypoglycaemic coma (extreme low sugar).

    You may want to peruse some of the following links on deflation :-

    Danger of deflation

    According to RAM Holdings Bhd group chief economist Dr Yeah Kim Leng, deflation could even hamper the stimulus programmes introduced by governments to revive their economies. This is because consumers may still not be induced to spend and producers may continue to respond by slashing production and wages.


    Quote 1
    Given that price pressures are falling rapidly in many countries, deflation is now a bigger risk than inflation. Of the 17 Asian and Australasian economies covered by our Country Forecast reports, we expect six (China, Japan, Malaysia, South Korea, Taiwan and Thailand) to experience negative average annual inflation in 2009, while Singapore will have full-year inflation of just 0.4%.

    Quote 2
    Entrenched deflation across Asia would seriously aggravate the economic crisis. If consumers became used to the idea of falling prices, they might delay major purchases in the expectation that prices would fall further.
    Source : http://www.economist.com/agenda/displaystory.cfm?story_id=13186114


    As for removal of import tariffs wreaking havoc on the local economy, in todays globalized world tariffs will only delay the inevitable, you cannot survive in the long term by becoming a “jaguh kampung”, if you cannot produce products that have global demand then why do it, and force your local populace to consume below par products.
    Instead of protectionism, we should produce world class products.

    On Proton there are mant papers written by industry experts and academics as to why its not viable, there are of course counterarguments.

    I reproduce below a dissenting view by one Adrian Chin who while disagree’s with me on the correlation of population size and auto industry,
    still thinks that we dont have what it takes.

    Post #2
    Adrian Chin replied to your post 10 hours ago

    It is also foolish to bail out national automaker Proton, we lose far more disposable income nationally than Proton can hope to provide in terms of employment and other economic spin-offs. A car industry for a population of less than 30 million such as ours is simply not viable, the only way it survives is by unfair competition.

    — Err not really. South Korea started their automotive revolution about the same time as we did, as with a few other industries and they also have about the same population as we do. The difference is, one knows how to make a car that can be voted Best in Class in the US and the other, cannot even export to its neighbors in South East Asia after 10 years of action. Population size has nothing to do with capability in the auto industry, as well as in other industries. I think Sweden also has a rather small population, though not sure what the figure is, and they have Saab and Volvo, which are rather successful

    Other than that, I agree with the rest of your posting.


    On the scorpene subs, they should not have been purchased in the first place , that too with 10% of the purcchase price paid to a crony company. Did you know we dont even have local expertise or naval docks that are capable of maintaining those subs, and we have not even got a quote or details as to their maintenence cost ? heck we do not even know if we have a local skipper capable of piloting it in battle situations, only the OSA prevents us from knowing the true costs of maintaining these “purple elephants” in the long term, thus my suggestion to dispose of them- as the reality of suffering commuters who rely on public transport is more likely than a war.

    Below is Najibs shopping list when he was Defence Minister (including the infamous subs), if these are peacetime military procurements I shudder to think of wartime requirements—

    Najibs shopping list

    Royal Malaysian Navy


    2 Lekiu Class Frigates
    2 Kasturi class Frigates
    1RAHMAT Frigate (104MM,40MM,ASRL,HELOS)
    2 OPV (100MM,30MM TWIN,HELOS)
    6 NGPV(BUILDING-VLSAM,MM40,LYNX 300) ( 25 more in the works )
    6 S AS 555N FENNEC

    Royal Malaysian Air Force


    18 SU 30MKM (Sukhoi (22) more on the works
    15 MIG 29Ns
    2 MIG 29NUB
    8 FA 18D (8) more on the works
    10 F5E (R)
    3 F5F(R)
    16 HAWK 208 (16) more on the works
    7 HAWK 108
    30 A4 PTM SKYHAWK (R)
    7 MB 339AM
    8 PC 7 MK II
    36 PC 7
    20 MD3-160 AEROTIGA
    8 C130H-30
    2 C 130H
    4 KC 130H (2 ON CONVERSION)
    8 CN 235-220M (2 ORDER)
    4 B200T MPA
    8 CESSNA 402B
    1 FALCON 900B
    1 FOKKER F 28-1000 VIP
    2 AS 61N1
    1 A109C


    Please pardon the lengthy post.


  15. Vijay Kumar Murugavell wrote on Mar 13, 2009 at 12:29 pm

    Automakers in large populations like China for example will likely have half of the problem that Proton has. It only needs to worry about improving quality to gain the trust of its own people. Then it can survive in its own country on patriotism of the citizens to buy local.

    Whereas for Proton, even if it improves its quality and gains back the trust of Malaysians, our population is too small for Proton to survive based on domestic market. Thus, it also needs to get busy exporting.
    At the moment only chronic Mahathirists believe that Proton produces cars of world class standards.
    Just like those in the current BN regime who think that the exercise of sending up a space tourist is actually going to yield
    tremendous results on cancer research for entire humanity which they claim after initialy being shamed for trivial pursuits like teh tarik in space


  16. empyreal wrote on Mar 13, 2009 at 5:46 pm

    i do realise, of course, that keynesian economics and monetarist policies had a see-saw of a relation in terms of popularity. every ten-years or so the vogue changes between them. yet in times of recessions keynesian policies have worked brilliantly. certainly what you advocated, sir, is a monetarist view (of controlling money supply) which actually pre-dates keynes and was used all the way down the great recession of 1929.

    keynesian spending (especially in the context of a developing economy that lacks the network of firms inherent in long-established economies, which is adds another layer of complexity) will likely here. of course, neither are monetarist policies debunked either, it’s just not suitable.

    on demand, i’m afraid i have to disagree. demand is perhaps there, but the key feature here is a lack of consumer confidence. this destroys the link between having demand and actual purchase. let’s say, i wwant a new toaster, but i fear that if the recession goes on i won’t have money to buy other stuff if i were to buy that toaster so i don’t make a purchase. on a greater scale, and to the producer, there is no demand. what he makes go unsold. workers get laid off, who themselves will worry about getting new toasters, making stuff worst.

    in times of recession, people hoard money. they keep it in mattrresses at home, especially if there is a worry that banks will collapse (which is why banks are getting propped up, the panic of collapsing banks will cause so much trouble). introducing more money into the economy will have low effects, because the marginal propensity to consume is low. you get 400rm free from the gov, and if you fear that the recession will take another ten years, you’ll save that 400rm. keynesian spending, on the other hand is by nature inflationary. that’s why you don’t do it, i.e. build new infrastructure, when the economy is good.

    in any case, what would be the mechanism that the gov use to introduce the money into the economy? normally, they either do it by introducing new bonds, which is what has been done, or they can purchase gold which at this time is quite expensive. you don’t just print more money and hand it out.

    in regards to proton, of course i don’t have much care for cars – i don’t like to drive, minor childhood phobia after an accident. i do know about cars, and i agree that malaysian cars are below spec. however, the economic issue is not about creating cars that can sell overseas, in my point i highlight the fact that protectionism keeps money inside the country. it’s the same savings we get if we simply ban cars from malaysia. with proton, its a substitute good. rather than not have a car, you can have a slightly pricey not-too good car (i’ve seen east german cars, they’re worse) to the benefit of the national accounts. in addition to that, without jobs, a few thousand engineers would’ve needed to migrate overseas to find jobs.

    so in the sense, the positive externalities of having proton is often not taken into account by such findings, which usually focus on the viability of the firm itself. it’s like a garden. a garden doesn’t earn anything for the gardener, excet for personal satisfaction which may not cover his own efforts, yet his neighbourhood also benefit from a beautiful garden, and they get that benefit for free. purely accounting measures will just say tell the gardener to not bother and just watch tv. economics is different.

    in regards on the military matters, of course, everyone realises that the list is a consolidation of over the years he was defmin, not a single receipt as it were.

    plus i believe that is actually the entirety of our arsenal partially because i believe we don’t have more than 40 combat aircrafts in total, some of the planes are actually obsolete and used for training, and my grandfather, as an army officer, was on board one of the frigates to take delivery of it. that was quite a while back. most of the military spending per year is spent on routine stuff – food, shells, bullets, blankets, that sorts.

    i do tend to type a lot, i apologise. nice blog, btw.


  17. empyreal wrote on Mar 13, 2009 at 5:48 pm

    i also apologise for my typos and grammatical errors. that is totally horrible!


  18. Zephyr wrote on Mar 13, 2009 at 9:20 pm

    u can always drop me an email or a msg in my blog 😎


  19. jingo wrote on Mar 14, 2009 at 10:30 am

    Good arguments from Vijay and Empyreal but a few questions.


    1) How can lowering interest rate cause deflation? COuld you explain in depth? The purpose of lowering interest rate is to increase liquidity in the market anyway.

    2) I would only consider point number 11 as the one to bring out the country from recession. The remainders are points of improving efficiency of governance which may not necessarily be translated to improving the economy at all.

    3) Point number 7 is not feasible. Woo foreign tourist? What multiplier effect? Most of the tourists are Westerners and they themselves are bashed hard by credit crunch. Retraining electronics workers to tourism workers are a waste of resources. By the time they have been retrained, the economy would have started to pick up, and the electronic industries would have to train workers to work in electronic industries again….Otherwise you have just turned Penang Island into a Haunted Island with huge white elephants left over from electronic complexes.

    4) Fiscal policies are a must. Say if the government does indeed save a lot of money from improved governance, then what? More money saved but economic growth not stimulated…. Now is the time to improved on public transport, build flood barriers, better sewage system, more schools, etc.

    5) No, deflation does not benefit consumers. Temporary deflation might but prolonged deflation wouldn’t. Employers will have decrease revenue, cutting back on salary and make more retrenchment. Consumers spend even less, demand falls again, employers cut again. You are risking a deflationary spiral.

    6) I wouldn’t remove tariff for now. We should be trying to ride out the recession not aggravate the recession. Besides, a certain degree of tariff is necessary to protect sovereignety, depending on products. For example, say Indonesia provide cheaper clean water hence wiping out privatised Malaysian water companies. In the event Indonesia decides to go to war with us, all they need is to cut of our clean water supply and they have conquered us.

    The only way to avoid recesson is to have command style economy like USSR, though it would mean more inefficient use of resources. I like free market but we should not be doing what that is ideologically correct but what is pragmatically correct.


    1)I doubt protectionism is as good as it sounds. Maintaining tarriff probably has no impact, but increasing tariff will produce protectionist backlash where by the countries affected will increase tariff for our products as well, decreasing demand, aggravating recession. Coordinated reduction of tariff within the ASEAN though might help to ease the recession effect. That is what ASEAN is for anyway. They will buy more of our cheaper products and we are able to buy more of their cheaper products.

    I wouldn’t pump money into Proton for free. If using tax-payer’s money, then Proton should be nationalised and we should have a say how Proton should be run. Otherwise let it go bankrupt and use the money for improving infrastuctures.


  20. jingo wrote on Mar 14, 2009 at 10:32 am

    note: point 11 alone from Vijay is insufficient to bring economy back to recovery or mitigate the effect of global recession


  21. bongkersz wrote on Mar 14, 2009 at 5:41 pm

    Let me try to answer that question regarding why lowering interest interest rates may lead to deflation in the current economic situation.

    Lower interest rates, means to increase more money in the system. Theoretically, consumers would have more money to spend and not much incentives to save because of the lower interest rate. But would they?

    Perhaps not in view of the current economic situation. Consumers tend to worry a lot. Just like what empyreal pointed out, their confidence is all time low now and most will hoard their money in their mattresses. What most likely will happen is, people will keep the money with them, but not with the bank because of lower rates and fear, and use the money to pay off their debts. This is because of excess money supply and lower interest rate now means more incentives for them.

    When a person put in money in the bank, say rm100, the bank will lend it another person, which will put rm80 in the bank and this goes. This means rm100 is worth more than rm100 in term of liquidity in what we call money multiplier effect. Less money put in the bank lessen the multiplier effect and reduce the liquidity in the system.

    With more debts paid, less saving leads to less liquidity in and banks have less money to lend out and this will bring deflations in. That’s why it is more important to help the banks than bailing out the stock market.

    Then during recession, commodity prices will go down, and with lesser demand especially to export oriented economy like us, this will lead to more decreasing prices and deflations.

    Yes. Lowering interest rate can lead to deflation in current economic situation. I stand to be corrected.


  22. empyreal wrote on Mar 14, 2009 at 5:48 pm

    point taken about protectionism. nevertheless it’s an eternal struggle between world economic globalisation, and national economic benefit. for example haiti, one of the most open economies in the world, had its rice-planting sector demolished by american rice which are, ironically enough, subsidised by the us government. so it’s not a cure-all.

    on a more technical note, increased trade is a double-edged sword. a large inflow of imports will decrease demands and aggravate a recession, too, in addition to worsening one’s balance of payments. it all depends on what you export and what you import. additionally, one of the side effects of a trade barrier is influx of FDI, funnily enough. let’s say indonesia puts a trade barrier against all foreign imports the foreign manufacturers who shift production into the country can now have a price advantage over its competitors in the local market. of course, this isn’t a winning argument, but it is fodder for thought.

    i’m less sympathetic to the ‘abolish the car tariff’ cost because i tend to view cars (especially more so for the higher priced ones, and ignoring our public transport conditions) as luxuries. of course, a lot of us would die before saying they’re not essential, but then again many say the same thing about television, too. were it up to me i’d have a luxury tax and it’d include cars too.

    i do agree somewhat with nationalisation move. the gov shouldn’t pump in money like a deus ex machina, but trade it in for shares. it leaves a bad taste in the mouth seeing one share holder bucking up the value of the other share holders.


  23. jingo wrote on Mar 14, 2009 at 7:37 pm


    Haha, you are right. In fact I think we are on the same wavelengths, we don’t see thinks in black and white but shades of grey or the string theory.

    The FDI thingy is indeed true. The trade barrier thingy is true, Japanese cars are the prime example. Hahaha.

    Economics is not an easy field, studying the psychology of an individual is hard enough, studying the psychology of the masses felt like insurmountable.

    Hard to say, who are the debts being paid too? WHo are the creditors? If they are banks, it might be possible that in the process of getting repaid, the reduce their risk to toxic debt, improving their portfolio. in fact with improved portfolio, customers have more faith in your bank. HSBC for example, is a retail banker, it does not expose itself too much to bad debt/toxic asset in subprime mortgage industry, hence when financial insitutions are collapsing, HSBC and Santander are actually gaining a huge in-flux in the depositors!

    ALthough ironically, most banks themselves will not be persuaded to lend because they are trying to shore up their liquidity to asset ratio. Whatever our deduction is, our conclusion is still the same, monetarist policy is insufficient to stimulate economic growth, is that correct?

    I think after the Asian Financial crisis, one thing Mahatir actually did right is too shore up the strength of our banks.

    We are too export oriented, our own fiscal stimulus may not be sufficient to overcome,
    over-capacity in some industrial sectors, but we could at least mitigate its effect and ride it out. In fact, what malaysia should have done is hold an emergency summit with ASEAN to coordinate economic ecovery, not trying to steal Perak over.

    Pardon me, not too adept in the banking industry, the mode in which they work in contrary to the type of operation their customers assume.

    I find it ironic that the people who want the government to improve public education and public transport are the very people who sometimes dislike Keynesian economics. When fiscal stimulus during growth encourages rampant inflation, which is unacceptable, fiscal stimulus during recession spurs a budget deficit, which is also unacceptable. so where do we go from here then?


  24. jingo wrote on Mar 15, 2009 at 2:10 am

    Bongkersz said

    it’s inter related, in my opinion. you must have efficient governance to execute good economic stimulus. the approach by the government is totally off. it has its own interest more than people’s interest, when you read the bailouts, stimulus finance directly channeled to its cronies. This is the perfect time to bring those companies to negotiation table, for example to renegotiate the lop sided agreements.

    re keynesian policies, our government is doing a half baked implementations. You mentioned public transport and public education, i see none in the stimulus package. We are debating the package, mind you. 😛

    giving stimulus package is just to prolong the pain. The faster we acknowledge the fact we are living on too much inflated credit and seek to cut off spending, have a balanced budget, the better. Instead of further inflating the credit and money supply to artificially float the economy, let it takes its course.

    If we have deficit, cut spending. If we have surplus, cut taxes. Find ways to help the real people on the street, not those companies living on credit.


  25. jingo wrote on Mar 15, 2009 at 2:12 am

    1) My comments were in relation to Vijay’s suggestion on improving the economy, which isn’t at all improving the economy. It is improving the governance. I will reiterate here again, there is a difference between IMPROVING GOVERNANCE and STIMULATING THE ECONOMY. I never said Najib’s stimulus package was an effective one. Vijay’s argument does indeed discredit Najib’s stimulus package, but being able to discredit Najib does not mean that his counter-plan is an effective ‘economic stimulus’ either.

    2) Malaysia is not living on inflated credit, the West is, but not us. We are suffering from the consequences of their inflated credit.

    3) Why do you want to cut taxes when you have a surplus? A surplus usually comes with economic growth, you increase taxes and interest rate to prevent run-away inflation and decrease velocity of liquidity circulation. If you have a deficit and you cut spending, you are ARTIFICIALLY causing the recession to become WORSE. During economic growth you cut taxes, you decrease the government revenue. During recession, you cut spending in order to save, but remember, the taxes that you gain from poluace also decreases when there is lack of economic activity. Cutting spending during recession DOES NOT INCREASE the size of your purse.

    4) People should follow China and Germany’s economic model. Get budget surplus during growth then splurge out on the foreign reserves during recession. It is about smoothening the economic cycle, reducing the heights of the nodes and reducing the depths of the troughs.

    Who wants to be a governor, always cutting this or that, are governors to survive on air alone ah?

    If my memory serves me right, Malaysia has foreign reserves to splurge from the economci growth after the Asian Financial Crisis. We can spend with less consequences unlike the US, and we SHOULD. The question is HOW DO WE SPEND? And here, I acknowledge that Najib’s stimulus sounds dodgy as proven by by the careful evaluation from Vijay.


  26. Vijay Kumar Murugavell wrote on Mar 16, 2009 at 1:34 pm

    Thank you both Empyreal and Jinggo for you probing and critical questions.

    I agree with a number of your points, but respectfully some that I will just agree to disagree.

    Dear Jinggo,

    Good governance is also about but not confined to optimum management of resources.
    First off let me state that the 12 suggestions I gave are not a cure for the current ecomonic woes.

    They are by no means exhaustive, (Noktah Hitam has suggested a few more that I have not covered) but point out some of our misplaced sense of priorities.

    I start with this disclaimer “these of course do not include macro economic measures which are better left to competent economists”

    By no fathom of imagination am I an economist nor do I pretend to be one, the questions I ask are concerns many citizens have as to the governments sense of priorities.

    Those 12 suggestions however all touch on transparency and bloated expenditure that drain the government coffers benefitting only a few cronies. These suggestions can also be expanded into topics of their own.

    Some opine that those lost electronic jobs are not coming back,Those lost jobs, especially in the manufacturing sector, will not be coming back. We better have a plan and a vision, see item no 17 at this link http://blog.limkitsiang.com/2009/01/15/how-malaysia-can-cope-with-and-overcome-the-effects-of-the-global-economic-crisis/
    Let me just give an example on tourism as you expressed some doubt as to how this may work.

    The only thing related to spin offs on the government website is ” spin a hand-made timber gasing (top) … ‘

    Lets first understand that we have an inept tourism minister who has not announced any tamgible tourism idea’s , sabotage opposition states efforts, and in Parliament talked about the marginal increase in tourism revenue in a perion that she was not the tourism minister in the first place.

    Looks like most of the people in UMNO she has been busy with party elections.

    We have travel brochures printed in English/ Malay being distributed in Germany, couldnt we at least spend money on a German /English translation to make it more relevant ? Yet they employed extra staff breaching government policy http://www.sun2surf.com/article.cfm?id=26614

    Tourists who have been coming here are not your average western “joe” who like everyone else is trying to make ends meet. If you go to Hong Kong , you wont see many Malaysians who are average wage earnest touring and shopping.

    Most tourist are upper middle class who have taken care of basic needs and have a little extra left over for holidays. A middle eastern tourist for example spends RM 8000 for a 10 days stay, a Sngaporean perhaps RM2,000. We are not even talking about the huge potential of the noveau rich from China.

    The minute a tourist lands , its money for us ,transport.hotel, tour gudes , restaurants, handicraft etc etc (use your imagination) These industries provide employment/income and also stimulate other support industries. When money changes hands it increases its worth and stimulates the economy.

    When Bali was bombed Air Asia gave out free tickets under it with Love to Bali scheme, to help their economy, how about Charity at home ? Have the relevant people from the tourism, airlines, hospitality and other related industries sat together with the ministry to identify high net worth tourists an maybe sponsor some free flights via govt funded stimulus , so they come here and spend…..?

    Instead the tourism ministry is gloating that cash strap malaysians are taking more domestic holidays compared to overseas holidays so this is a boost to local tourism, they never in a concerted manner spared a thought about atracting foreign tourist aand with them bringing in money to add to the local circulation. These are things that are worth spending money on ,I say spend but on things that bring us value, I did not suggest austerity measures. Tourists spend about RM14 billion, or 20 per cent of the annual RM70 billion that the Malaysian retail trade is worth. And we allocate only RM40million for training which is pathetic.

    With such uncoordinated efforts we earn Rm14 bil on retail alone, imagine if we expanded that pie. Heck ,hat would be more than the direct fiscal injection of the stimulus which amounts to RM18 billion.

    I have not even started on the other areas, this is just tourism.

    Dear Empyreal,

    When it comes to economic theories , there will be people taking either side or even a third opinion, the question is “will it work ?” even after the events have unfolded economists will still argue on what made it happen,

    For example the 97/98 currency crisis, economist Paul Krugman thinks its because of “currenct control-pegging measures”, Dr M was basking in this glory for a long time, yet how many Malaysian have heard view points from other figures that opined that the currency peg did no such miracle and Dr.M was taking undue credit for what was events unfolding that had nothing to do with him, I attended such a talk by one New Zealand economist last year, wish I had recorded it.

    You may find at link below, the questions posed by Sak mongkol very interesting to ponder upon, esp keynesian and monetary policies. The solution recommended by Keynesians is for government to spend whatever private citizens don’t — for government to buy what private citizens won’t.

    Quote :

    I am just curious; could all this be a red herring to give the government reasons to disturb the market? Is it possible that such an explanation is to also provide the excuses to hide the weaknesses and flawed economic policies? That really, the falling aggregate demand is the product of economic mismanagement?



  27. bongkersz wrote on Mar 16, 2009 at 4:09 pm

    Copy and paste, edited from private conversation with Jingo:

    During RECESSION when you have surplus you cut taxes so you earn less. Why you want to earn more during recession? Nevermind, it’s not possible to earn much during recession anyway.

    You have higher taxes during growth to increase government revenue. US did the exact opposite and see what happens.

    When you have deficit you cut spending. Why? You cut taxes to introduce liquidity, to give consumers more money. Well you and me probably differs in this area as I think money should be in consumers hand, and let them decide the market direction. Government intervention should limit to regulation, not influencing the market direction. We had enough of that.

    If the market is going to contract to readjust let it be.

    Hmmm… to be honest, I prefer we taking the short painful deflationary route than than long and slow painful inflationary route since the objective is the same – to bring back the market (and economy) to its real value.
    tax cuts is vital during recession. you cut spending to avoid artificially increase growth.

    Perhaps you should have a read on Japan and her many stimulus packages back then, during her recession periods. Read how they reduce interest rates, increase public spending, with lukewarm results.

    Our economy needs stimulus but Najib is busy stimulating his cronies. To be fair I think Vijay mentioned few ‘stimulating’ points. On tax cuts. That’s a direct stimulant. The rest more on good governance, I agree which is of greater importance during this trying period than before.

    Not enough emphasize given to private sectors, the real shaker and mover of the economy. Our fate lies in the businesses. So, stimulate them, not some stupid F class contractors and increasing government servants number.

    Jingo replied:

    I didn’t say cutting taxes is not a wise move. On the contrary I think it is during recession. It should be a combination of monetary and fiwscal policies. Haha, nono. usually during recession there is no surplus to beging with

    1) Collapse in revenue from income tax when people have less money or got retrenched.

    2) Collapse tax from trading (such as vat), capital gains, government tax on food each time you go to restaurants when people eat out less, etc.

    3) Social benefits to the unemployed

    4) Creation of coupons for the poor to stimulate demand.

    5) Subsidies for the increasingly poor majority

    6) social implications such as increasing criminal activities and the economic consequences of having to catch, prosecute and put people behind bars. all these need money you know?

    China is different, it is probably the only country with increase in surplus during recession, the reason is that, all though exports fall a lot, the demand for imported products fall faster than the rate at which exports fall, hence the increase in surplus.

    How can you be sure that by only cutting taxes and lowering interest rate you are not doing enough to prevent a long term deflationary spiral? People expect prices to fall they stop buying, demand falls, industries cut back on workforce to cope wih falling demand, people have less purchasing power to stimulate demand (coupled with other consumers who specualte a further drop in price), demand drops furthers, industries cut back more workforce. Who is going to put a floor to the collapse?

    US is different. the primary reason they got budget deficit during economic growth is war in Iraq, afghanistan and upgrading military complexes. in fact US (even before bush) is so dogmatic to not interfere with market then whatever revenue they get, they squandered it in Military complexes. Bush is just more spendrift with his war policies.

    Japan again is different. People have argued that Japan during the 1990s were to slow to react. The government was always one step behind, hence they need a bigger more drastic measure once the consequence of their first plan failed. By the time they got the first result (negative) and try to come up with plan B, but in the process of making Plan B, the economy is still accelerating faster into oblivion hence plan B fails too once it was implemented. They play Wait, see and react game. They should be PROACTIVE not being TOO REACTIVE

    One also has to understand that Japanese infrastucture was as good as it can be even before the 1990s. When the fiscal stimulus was to build more infrastructure, how much more can Japan do when they already have high class infrastructure? hence they actually build BRIDGES TO NOWHERE. Consumers saw through that white elephant project, it has an investment with NO FUTURE prospect, how do you expect consumers to regain confidence in the market?


  28. jingo wrote on Mar 16, 2009 at 7:39 pm

    Keynesian economics can be mask for previous fiscal mistake, I can’t deny that. But any other ideas like Monetary policy can also be used as mask for poor monetary control in the past.

    I fully agree with you Malaysia has full of opportunities in tourism, considering that we have rich cultural and cuisine history. Tourism in Malaysia anyway, however it will help to increase economic activity once growth has been kickstarted but it won’t in itself kickstart economic growth.

    Here is why:

    Improving on tourism is no doubt good but it is a luxury commodity not a necessity, the Chinese themselves are cutting down on exports to go for local produce. What makes you think these tourist won’t cut down on foreign travel to go for local travel? Even Abu Dhabi has to bail out Dubai, and we all thought Dubai was filthy rich.

    How can you convince foreign citizens to spend when they are trying to SAVE? Bear in mind going for a holiday has no RETURN OF INVESTMENT. However, if you have policies like encouraging the growth and efficiency of biofuel, there is a FUTURE in it, it is more likely for them to invest because there is a RETURN OF INVESTMENT, and it is a necessity for people to WORRY about their FUTURE especially in the east when we have no social welfare.

    Not everything must be subjected to the forces of free market. Education and military are good examples. Education is a basic human right. To say that I am too poor to purchase an education is just plain wrong, and I will end up in the poverty cycle loop just because I don’t have money to educate myself. Same goes, you don’t sacrifice your sovereignty for a few companies to run your military (which could be foreign).

    Fiscal policy to improve education is compulsory for me but Najib’s plan has none of it. With more technological experts (with right policies), we could in fact also be technologically competitive.

    I don’t think electronics indusrtry is dead. We have the facilities all we need now is technological innovation to remain one step ahead of China and India but plugging the brain drain. They may be producing low end electronics good, we should start switching to HIGH END PRODUCT like QUALITY CONTROL. We all know China is not synonymous with PRODUCT QUALITY CONTROL.

    I am a engineer cum scientist. Personally, I don’t like dogmatism in either Chicago/Illinois school of thought or Keynesian school of thought. I would like to reference Charles Darwin here. We know nature is always changing, so is the society. If the society changes (taking into mind globalisation), the psychological profile of the society changes hence the variabilities. We have to evolve to the constant changes even if it means tweaking or revamping the ideals of Milton Friedman or Keynes. otherwise, we go ‘extinct’.

    I still propose a coordinated effort via the ASEAN to tackle the slump but BN has been busy conspiring to disgust us rather than doing what is best for us….


  29. Vijay Kumar Murugavell wrote on Mar 17, 2009 at 10:58 am

    Thanks for sharing your perspective Jingo,
    especially your darwinian take on the need for the economy to evolve,many longstanding beliefs are being obliterated by globalization .I think you may find the article below and interesting read

    10 Financial Myths Busted
    by Jeffrey R. Kosnett
    Friday, March 13, 2009
    provided by

    Before the economic rout, you could rely on certain iron laws of personal finance. For example, it was a given that house values didn’t fall. Money-market funds never lost a dime. And no matter how ugly the market, expert mutual fund managers could protect you from drastic losses.

    Alas, in this Hydra-headed global financial crisis, another generally accepted principle of financial strategy or economic logic finds its way into the shredder almost every day. We gathered ten truisms that no longer pass the test.

    MYTH 1: There’s always a hot market somewhere. When U.S. markets began to blow up, you heard about “decoupling” and “the Chinese century.” The idea is that Asia — or Russia or Latin America — can grow vigorously independent of the U.S. and Europe. Invest there and you’ll offset losses at home. Instead, Chinese, Indian and Russian shares have crumbled. Net investment money flowing into emerging-market economies fell 50% in 2008, to $466 billion, and is forecast to sink to $165 billion in 2009.

    Truth: In this age of globalization, economic downturns and bear markets observe no borders.

    MYTH 2: Real estate behaves differently from other investments. Call it a bubble instead of a boom if you like, but it was supposed to be “proof” that real estate returns don’t strongly correlate with the returns of stocks and other financial investments. The message: Rental properties or real estate investment trusts can make money despite drops in Standard & Poor’s 500-stock index or the Nasdaq. Wrong. REITs lost 38% in 2008 because the credit crunch and overly aggressive expansion plans hammered profits and dividends. REIT returns used to have little correlation with the stock market. Now they closely track it.

    Visit the Banking & Budgeting Center

    Truth: Real estate won’t overcome other risks when credit problems are harming all investments.

    MYTH 3. Reliable dividend payers are safer than other stocks. Companies recognized as dividend “achievers” or “aristocrats” — because they could be counted on to increase their payouts regularly — used to perform more steadily than most stocks. That’s because shareholders seeking income tended not to sell. But now shares of dividend achievers can be as volatile as the overall market. One reason: more mass trading of blue-chip stocks in baskets, a la exchange-traded and index funds. Another factor: Banks, insurance firms and real estate companies can no longer afford to pay high dividends.

    Truth: Companies aren’t too proud to stop increasing dividends. If you want stable dividends, ignore the past and look for companies with lots of cash flow.

    MYTH 4. Foreign creditors can drain the U.S. Treasury overnight. Puny Treasury yields suggest that it’s bad business for the rest of the world to lend so much money to the U.S. But think: What else would these investors do? And who has the power to impose this dramatic sell order? Nobody. Foreigners own $3.1 trillion of Treasury debt. Of that, $1.1 trillion is with private investors — mainly pension funds, which cannot safely ignore a class of investment that is absolutely liquid and has never defaulted. Governments and institutional investors hold the rest. On occasion they have sold more U.S. debt than they have bought. But massive private buying has overwhelmed the modest pullbacks.

    Truth: If what you want is super-safe bonds, the U.S. Treasury is the go-to place.

    MYTH 5. Gold is the best place to hide in a lousy economy. In early February, an ounce of gold traded for $910. That’s just where it sat a year ago, when world economies weren’t so bad off. But foreign and domestic stocks, real estate, oil and riskier classes of bonds have all tanked since, and now gold looks — ahem — as good as gold. However, gold does not typically benefit from a recession. As inflation slows, people buy less jewelry, industry uses less gold, and strapped governments sell reserves to raise cash.

    Truth: Gold tends to rally in prosperous times, when you have inflation, easy credit and flush buyers (kind of reminds you of real estate. . . ).

    MYTH 6. Life insurance is not a good investment. This canard spread as 401(k)s and IRAs supplanted cash-value life insurance as Americans’ most popular ways to build savings while deferring taxes. True, the investment side of an insurance policy has higher built-in expenses than mutual funds do. But two factors point to a revival of insurance as an investment. One is guaranteed-interest credits on cash values, which means that if you pay the premiums, you cannot lose money unless the insurance company fails (see “Savings Guarantees You Can Trust,” on page 55). The other is the boom in life settlements. If you’re older than 65, you can often sell the insurance contract to a third party for several times its cash value — and pay taxes on the difference at low capital-gains rates.

    Truth: A good investment is one in which you put money away now and have more later. Checked your 401(k) lately?

    MYTH 7. The economic downturn dooms the dollar to irrelevance. No question, the U.S. is deep in debt and going deeper while the economy contracts. History teaches that when a country can’t pay its bills, lags economically and cannot control inflation, its currency loses value. That’s why currencies in Argentina, Iceland, Mexico and Russia have all crashed within recent memory. The dollar does swoon, and it’s lost punch in places as unexpected as Brazil and India. But — and here’s the surprise — as recession gripped the U.S., the dol-lar got stronger. For one thing, there aren’t many alternatives. For another, some other currencies were temporarily inflated by oil and commodities speculation.

    Truth: The dollar has survived a tough test and remains the world’s “reserve” currency.

    MYTH 8. Mass layoffs reward investors. In the 1990s, news of layoffs would boost a company’s stock for several weeks. Stock traders lauded bosses for tightening their belts, so it was smart to buy or hold the shares. But mass firings no longer impress investors. Lately, firms as varied as Allstate, Boeing, Caterpillar, Dell, Macy’s, Mattel and Starbucks have all announced enormous layoffs — only to learn that, if anything, doing so spooks the market even more. For example, on the day in January when Allstate axed 1,000 of its 70,000 employees, its shares fell 21%.

    Truth: Don’t buy a stock thinking that a layoff will help profits. More likely, trouble’s brewing.

    MYTH 9. It’s crucial to diversify a stock portfolio by investing style. Experts say a sound fund portfolio fills all “style boxes,” starting with growth and value. Growth refers to companies with expanding sales and profits. Value describes stocks selling for less than the business is worth. In 1998 and 1999, growth stocks soared and value stocks stalled. Then, for a few years, value rose while growth got crushed. But since 2005, the differences have been melting away. In the current bear market, both styles have been disastrous, and it’s hard even to classify stocks as growth or value anymore. Many former growth stocks, such as technology companies, are so cheap that they act like value shares. Banks and real estate, once lumped into value, are a mess.

    Truth: Pick mutual funds that are free to search for good prices on stocks, whatever their labels.

    MYTH 10. A near-perfect credit score will get you the best loan rate. Before the credit bust, if you could fog a mirror, you could get a mortgage. You know what happened next. But bankers still need to make a buck, so it sounds logical that if you can show a strong credit score, you’ll win the best of deals on any kind of loan. Not so. Mortgage lenders prefer large down payments. Credit-card issuers are just as apt to reduce your credit line or raise your interest rate. And those 0% car loans? Often they last for only three years, which puts the payments so high you’ll need to come up with more upfront cash anyway.

    Truth: Credit is going to be tough to get for a while no matter what. So don’t obsess over every few points of your FICO score.

    Copyrighted, Kiplinger Washington Editors, Inc.



  30. jingo wrote on Mar 19, 2009 at 11:50 pm

    Thank you for your time, Kumar to present your ideas and those links on Finance and economics. I truely appreciate it, it helps me to analyse and learn the abstract from the facts that I have gained. 😀 Bongkersz and I had a separate discussion about it too. Have a good time. 😉


  31. thintanker wrote on Mar 20, 2009 at 2:54 am

    Guys it was a real treat reading all your posts, your efforts are very much appreciated.

    Could you kindly try to sum up this intellectual rhetort into just three sure-viable actions, that the government or people can take to face this unprecedented economic situation.

    Most of us are not of your intellectual/academic background, hence the need for a dumb-down summary.




  32. bongkersz wrote on Mar 20, 2009 at 8:56 am

    Thanks for dropping by thinktanker.

    I believe, 3 main points are:

    1. Good governance – better transparency, and planning to optimize resource management
    2. Saving from wastages, lopsided agreements, bailouts – to avoid bleeding the coffer of the country
    3. Simple yet effective schemes/plans to help ordinary people on the street eg. – coupons for food, essential goods instead of subsidies, tax cuts for citizens, improve public transportation etc. , incentives for farmers, fisherman to produce more goods at cheaper rate and hunt down the shreaw middle man from hiking the price.

    The way I look at it, it’s all tied up with ‘GOOD GOVERNANCE’.


  33. Vijay Kumar Murugavell wrote on Mar 20, 2009 at 1:36 pm

    It can even be summed up into 1 main point, topple the BN government from power and adopt
    Pakatan manifesto into the economy.
    Competence, Transparency and Accountability (CAT) currently what we get is…..
    Incompetence, back door dealings and denials.

    At the moment ANYONE with sincere intentions can do better thabn the ruling government.

    I will not be surprised if a Pakatan govt takes over and makes Lim Guan Eng the Finance minister (under the able tutelage of Anwar) malaysia will give Hong Kong a run for its money in about a decades time.


  34. Elcoj wrote on Apr 30, 2009 at 1:25 pm

    I have already seen it somethere…


  35. Elcorin wrote on Jul 18, 2009 at 5:35 pm

    Hi there,
    Where are you from? Is it a secret? 🙂
    Have a nice day


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