Wednesday, March 30, 2011

Illustrating False Hope and Never Trusting It

Here, I would like to illustrate the sense of false hope portrayed by the minister and the national propaganda news agency - they spur propaganda to make it feel good and complacent:

KUALA LUMPUR, March 29 (Bernama) -- The country's debt last year amounted RM407.1 billion or 53.1 per cent of Gross Domestic Product (GDP) and is no cause for worry, Dewan Rakyat heard Tuesday.

Deputy Finance Minister Datuk Awang Adek Hussein said of the amount, RM390.4 billion or 96 per cent was internal while RM16.7 billion or four per cent was external debt.

"Concern should be on foreign debt but at only four per cent, it is not worrying. Our GDP ratio is much lower than others including developed countries," he said when winding up debate on the ministry's Supplementary Supply Bill (2010) 2011.

Awang said the debts were from loans to finance the deficit and finance development projects planned. The loans will generate revenue to the government as it is an investment.

"The returns will be higher. This is normally the case except during an economic slowdown."

Commenting on alleged unequal treatment of Malaysia Airlines and AirAsia, he said the government gave due consideration without bias to any airline.

Awang said 24.6 million tourists visited Malaysia last year compared to 23.6 million in 2009 with tourism receipts rising to RM56.5 billion from RM53.4 billion in 2009.

"Part of this increase in tourist arrivals was due to AirAsia's promotion of low-cost fares," he added.

Maybe if you do not know about Murphy's Law, then you won't know. Never assume that things will go back to normal as it was before. Mahathir misjudged of the economic direction back in 1997 when the Asian Financial Crisis hit and Malaysia never recovered fully from that bubble burst unlike Singapore who managed to cushion it down and rebounded it back to a healthy black level sign.

If you take a the total amount of reserves from Bank Negara and attempt to pay off all debts, you virtually have no reserves at this point and you still have a fraction of 5% GDP equivalent of debt to be paid off. This calculation is based on the total reserves as at end of January 2011 - which is RM 368.57 billion, after conversion, with the USD exchange rate counted at 3.05.

When we try to offset the present debt, we still have a debt of RM 38.43 billion, which is 5% of the GDP. With calculation, you can say that Malaysia is still having no extra money in available. And assuming that we pay internal debts first, we still have yet to pay off the external debts there. And so this is why to recoup and getting the extra money needed, Malaysia was forced to privatized most of their properties and introduce various taxes (e.g GST), still pursuing the "saman ekor" as part of the "make a quick-buck" desperation.

In the Abdullah Badawi years, the external debt average was consistently at $52 billion USD, whereas after Najib took over, the debt average ballooned by another 25% to $69 billion USD. The Keynesian concept and model that Mahathir used back then is also used by Najib as well but it might not work unlike previously. Note: This is based on the debt chart statistics.

Malaysia, ala with ego still wish to pursue mega projects thinking that they can recuperate long term and go back to the black zone (positive territory), but they are playing high-stakes poker here with the risk of project failures, delays coupled with NEP-based policies. Having read the "Economic Hitman" book thing, I don't think that Malaysia is heeding the warning of being swindled of billions of monies by hitmen and making projects ending up as white elephants.

One more thing that I keep seeing about giving false sense hope is about poverty rating. 108 extreme poverty families is not convincing to me. The statement sounds a little unrealistic to me mainly because that the yardstick that they used to measure what defines extreme low or whatsoever is not at the actual realistic real-world point. That means, the baseline was set too low. The statement was to make things happy to all, but it removes the sense of reality that people should know and be ready for it.

In fact by injecting the false sense of reality, the government and the news agency is lying on themselves as well in addition to "duping people" thinking that nothing is wrong all in control trust me thing.

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