Slippery Prose

I am looking forward to seeing Disney On Ice’s Princess Wishes with two daughters in about two weeks time.

It has certainly been a while since I last saw a live show.

There is a world of difference in watching a performance right in front of your eyes compared to the comforts of one’s home.

Certainly the latter is far more economical, though, and this is one of the reasons why I normally shunned live shows – theatres, concerts etc.

I do hope they would enjoy the outing. We did have some great times watching the starry show at the Planetarium, so this one should prove just as good a hit, if not better.

Speaking of the Arts, I am somewhat baffled by the RM20million allocation in the SSP said to be for “the local arts community to produce creative works in a systematic manner” and that “RTM will implement several projects to develop the local music industry”.

Fans of the hilarious “Yes Minister” series may well recall a chapter “The Middle Class Rip Off” where the issue of popular sports versus Arts was skimmed through, with the Minister James Hacker for the vote-winning former and his Permanent Secretary, Sir Humprey Appleby, for the latter.

The story involved Hacker’s decision to demolish an art gallery in his local constituent, sell the land and use the proceeds to save the local football club.

Sir Humprey’s response to this was a typically snobbish “subsidising self-indulgence”, though not to his Minister’s face directly.

(The Brits are really masters in the art of wit. “Yes Minister” is filled with deliciously, wicked, witty cracks like this one: “"Railway trains are impartial too, but if you lay down the lines for them that's the way they go."

By the way, that is from Hacker’s Private Secretary (“None of us types”) Bernard Woolley who makes inane quips to avoid answering potentially controversial questions that requires him to take sides between Hacker and Sir Humprey.)

Being fans of the arts in all its various forms, I must say that I am in agreement with Sir Humprey in this issue.

I don’t believe for a moment that artistic establishments such as Istana Budaya, Dewan Philharmonik and the many art galleries could survive, much less thrive, without some kind of economical patronage.

In simple word: subsidies.

Realistically, these establishments will bleed money and commercial is the last word than can be associated with them. (I stand to be corrected.)

RM20 million is not much money these days but surely there are better creative art causes to which the allocations can be made than something as crass (opps!!) as “the local music industry”.

The local music industry might not be the huge commercial success that they could be, but on the same vein, struggling artists ala the late Tan Sri P. Ramlee are a dime a dozen these days.

Perhaps, the allocation is looking more at the angle of “stimulating” local fans.

If so, then it should be money well spent.

Porky Barrelling

“Cash back from the government? Stupid, wasteful and ineffective - and a shameless attempt to woo voters.”

This reaction came from the high savings Japanese on the proposed one-time cash handout of 12,000 yen (about US$120 each) by the government.

A good majority of respondents pooh pooed the idea as something that would help spur spending for the recession stricken economy that used to be second globally, behind the United States.

US$120 (in micro economic terms) also isn’t that much moolah that would make you suddenly developed an itch to be extravagant, especially since it’s a one off thing.

I would have wondered if Malaysians would have made the same kind of rejection but for the overwhelming 78% of contributors (4.4 million) to the Provident Funds all FOR a 3% reduction in their “savings for the future” response back in January.

As well as a possible 100% (I’m truly guessing here) take up for the also one time RM625 and RM150 fuel subsidies upon renewal of the yearly insurance and vehicle road tax.

Since the Provident fund’s reduction only starts this year, one cannot really gauge whether it would have a positive impact in promoting some growth in the economy.

As for the latter, there were little - statistically speaking - to show as to its effect as the country growth plummeted to a mere 0.1% in the 4th Quarter last year.

Had it not been for the fantastic prices of our commodities – palm oil and fuel – in the first half of the year, the country would have seen a much lower than the 4.6% of GDP growth for the whole of 2008.

Back to Japan; though.

The common thread in all of the detractors’ minds was this: how would the one-time payment help the mainly export-based economy grow or stabilise?

In an earlier article in the Herald Tribune on the country fiscal stimulus of the early 1990s – which spent nearly US$2.1 trillion for construction jobs (contractors, please stop salivating!) - many of the local analysts decried the hefty funding of infra works that provide little in future growth value.

Bridges and roads that lead to nowhere in particular were the common lamentations.

Studies – said the article, not me – showed that Yen for Yen (growth wise), the better investments were in structures of social significance; those which includes hospitals, educational and, even, elderly care institutions.

A particularly damning criticism for the stimulus package was however this line: “... used government spending to grease rural vote-buying machines that help keep the party in power.”

Sounds ever so familiar, doesn’t it?

Going by the sentiment shown to the latest offering from embattled Japanese premiere Taro Aso (of the Liberal Democratic Party, the carrot method no longer works and people genuinely wanted something positive instead.

One comment goes so far as calling it “Pork Barrel spending”, linking the payment asincentive to keep LDP in power.

Japan is in deeper shit than any other Asian economy so far, our “What technical recession?” country included.

If they manage to turn around theirs, then the methodology used would be a great example for the rest of the region to replicate or at least copied in some ways.

The last time Japan introduces a stimulus package, it manages a two year positive growth albeit in a scenario of burgeoning and healthy trading nations.

This current challenge however would take real genius to tackle.

Don’t look like any is emerging so far, though. What about us?
We wait for March 10 with bated breath.

Hopefully its nothing like the “tolong kawan – kawan” RM7 (on paper) billion stimulus package.

Wouldn’t bet on it though.

No signs whatsoever that it would be any different.

Illyana Nikolievna Rasputina

Stimulating Stimulus!

Our so-called first stimulus package is fast turning out to be a dud (dead?) deal.

While it’s “ciput” money at RM7billion (compared to the rest of the world’s, of course) but the almost invisible impact on the ground makes it even lesser still.

Now from the horses' mouth we hear “the results could only be seen and felt in 12 to 18 months as the funds are being distributed in stages to big projects.”

??????

Stimulus packages are supposed to be shock therapy, to jumpstart the recovery (or at least to lessen the pain), otherwise we might as well call it a budget.

If it takes a whole bloody (Cor Blimey!) year and a half to have any visible impact, its just not worth an iota as a stimulus package offering as by that time, the world’s economy would either:
~ be at the stone age era, with barter trades back in style, or
~ back on the fast track of yet another bubble waiting to burst.

I’ve written on our seemingly very slothlike pace, but really, 12 to 18 months?

While everyone else is raring with their gigantic stimulus packages (Japan has announced THREE in the last few months; but their economy is really down in the dumps), we are stuck in “kita akan kaji" mode.

Curioser still is the portion of the Deputy Finance Minister’s statement on “distributed in stages to big projects” as news reports suggest the RM7 billion are mostly to the small and medium projects instead.

Things like “low and medium-cost houses, upgrading, repairing and maintenance of police stations, army camps and living quarters, minor projects like village roads, community halls and small bridges, public amenities such as roads, schools and hospitals; and building and upgrading of roads in rural areas, villages, as well as agriculture roads.”

Small, minor ticket items, that help mostly the Class F contractors.

Hmm.... 12 to 18 months for the impact to be felt; meaning what?

That the money will only be paid in 12 to 18 months?

That the constructions would be complete in 12 to 18 months?

That spin-off economic activities would only be seen on the grounds in 12 to 18 months?

Another intention of stimulus packages is to inspire confidence.

“12 to 18 months” is as inspiring as watching banana slugs race.

Heck, at 6.5 inches every two hours, it might just outspeed us.

The need for speed: the Shinkansen

Lightning Quick

I am really envious of the folks down south.

Singapore would be unveiling her 2009 budget today (Jan 22) with Bloomberg hinting of the government “announc(ing) record spending in its budget today to help companies hurt by the global slowdown and preserve jobs” .

It seems that things can really move at lightning, quick speed in the Republic.

Over at The Edge, I came across this news:
"Singapore, facing its worst economic slump in four decades, changed its law to help people avoid bankruptcy as job losses and loan defaults rise."

In a word: Wow.

The closest WE are getting over here is Bank Negara’s benchmark interest rate cut , something which – going from reports on similar moves over in the US and the UK – doesn’t really work to prop up the economy where it matters: Confidence.

At least we are getting some fair measure of “truth” here:

“The sharper deterioration of the global economy is expected to have a greater impact on the Malaysian economy. The large decline in external demand has already led to a contraction in exports and a moderation in the pace of private investment activity.”

BNM speaks of “urgent implementation of policy measures”.

???

Hasn’t the global slowdown been with us for the last half year or so, if not more?

Meanwhile, our lame duck government is “gathering views, looking into things, waiting for the right time and believes that RM7 billion will spur a 1% growth” even as exports figure diminishes, factories go on long holidays and projects get cancelled.

For God’s sakes, what exactly are we waiting for?

Speak to any economist and they would tell you that it’s this first quarter of the year that delivers all the BAD news in statistics of whatever drops, losses and what not, incurred last year.

This period would be the one where we hoped our projections were wrong, but nevertheless ready for the worse case scenario.

We might not want to talk ourselves into a recession , but surely some urgency when it looms clear wouldn’t hurt one bit.

Truly, we are in need of someone with balls of steel.

Rolling Stimulus

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.