Now that the euphoria and the excitement of the KT by-election are over and done with, perhaps someone can take charge in galvanizing the country to face the economic storm that is brewing all over.
Two quotes (long ones, in fact) from two economists played in my mind even as I type this posting.
The first is from Herald Tribune’s columnist Thomas L. Friedman:
“A stimulus package that does not also unclog the arteries of our banking system will never stimulate sufficiently. Obama should take the pain early, blame it all on George Bush and then reap the benefits down the road. Postpone the pain, postpone the recovery.”
Friedman is talking of the billions handed out so far to the US financial institutions, which has had zilch impact on its economy, or even its consumers’ confidence.
Talk is rife that all those funding just goes into their balance sheet, hence to continuing dismal outlook for 2009.
A quick look at external trade statistics shows that electrical items is easily our main export (at 39%) while commodities palm oil and crude oil second (at around 17%).
It doesn’t take brains to deduce that the dismal commodity prices and lukewarm (or has it gone icy cold now?) demand combined means trouble for the country.
The pressure is for us to sustain some growth until America (and with it, the world) heals, something their new president is saying that it would take some time (years?)
Alas, America has dug itself quite a deep, deep hole to climb out from. You can check out yourself how much debt they are in, here .
Surreal isn’t a word I would use in this instance.
Back here, we are expecting the roll out of some RM7 billion in stimulus package, an amount so small to be spoken in the same breath as that of the US US$700 billion or China US$586 billion package.
The country still seems like its on auto-pilot – something which had been the case for sometime now, ever since Abdullah took the rein of Premiership, and now with a so-called power transition being in place, the pace is even more arduous.
It’s like we are literally sleepwalking even as the world crumbles about us.
Nothing concrete is anywhere to be seen to push the economy to at least hold out for the next two years (taking the pessimistic view that the global economic slowdown would tide out in 2011).
There’re a whole lot of assurances, but words are pretty useless when the deeds show otherwise.
Pump priming when the country’s finances are already in deep deficit is dangerous.
In the words of MIER executive director Mohamed Ariff Abdul Kareem:
“We may be sowing the seeds of the next crisis right now. We’re pumping in so much money and we’re creating so much debt, which is the reason why we are experiencing a severe financial crisis in the world economy.”
The good Professor is nonetheless looking to the government for a further fiscal stimulus of between RM7 to 10 billion.
Where should this go to? That's is for our economic brains to decide on.
I was listening to Business FM Breakfast Grill this morning on the way to work, and one of the two speakers (who were debating each other) said something about the country missing out on the push for high value instead of low cost factors in production.
Instead of pushing the envelope of competition to a higher level, we were basically stuck with protectionists policies aimed at keeping costs at low levels.
Perhaps this is something we can work on now especially with the slowdown and everyone willing to cut back and sacrifice as to ride out the economic storm.
Bio-technology sounded like a good bet, but thus far, success stories are too few and far in between to really make a difference.
If there is ever a second stimulus package, it should not go to balancing sheets without any impact on the masses in terms of jobs creation or opportunities.
It’s painful to start from scratch but there is no better time to do so than right now.