".... The NST of 9/02/07 quotes the Second Finance Minister (Nor Mohamed Yakcop) saying
.... a Finance Minister taking the pulse of the economy by looking at people eating in restaurants. The Minister did not say if they were eating ‘nasi lemak’ or ‘roti canai’?
“The feel good factors are very clear now. Retailers are seeing an increase in business, the shops are quite packed now and so are the eating places and so on.
We are very confident that the good times are here.”
There seems to be an orchestrated attempt to falsely project this feel good image.
The Second Finance Minister does NOT seem to understand business and industry very well.
.....The NST of 8/02/07 quotes Prof Dr Mohd Ariff, the Executive Director of the Malaysian Institute of Economic Research in solid capitals “INFLATION UNDER CONTROL, COUNTRY ON SOLID GROUND”. The Professor is quoted as saying ‘The economy is on solid ground and doing well on all fronts. . . Budget deficit and inflation is also under control’.
The Professor is a mamak whose wife probably packs him a nasi kandar lunch everyday.
He does NOT know that:
Just a year ago one could have a good lunch for under RM4.00. The ordinary people are now reduced to eating rice, sambal and telur masin to keep their lunch bill to about RM4.00.
a simple nasi campur lunch in Kuala Lumpur (rice, chicken and sayur) now costs at least RM5.00. A drink of mineral water to go with the lunch costs RM1.50. That is RM6.50 just for lunch.
The toll from Awan Besar to Subang Jaya alone has also increased from RM3.00 to RM4.40 – an inflation of almost 50%.
Surely the Professor cannot be riding a kereta lembu to work to not notice that fuel prices have gone up tremendously?
Then the NST has a picture of a grinning Bank Negara Governor Zeti lauding that the Ringgit has soared to a nine year high against the US Dollar.
The NST’s front page of 7/2/07 screams “Better Days – These Malaysians certainly think so” with a picture of a Malay contractor and a smiling Chinese architect. The third person however is a non Malaysian who runs an electrical business in Kuala Lumpur and remits about RM500 per month to his wife in India.
The NST has compared the economic health of these two Malaysians and the non Malaysian against the Financial Crisis years of 1998, when the financial crisis was at its peak.
Why not just compare them with the Great Depression years of 1929 – surely we have all done much better compared to 1929?
A day later on 8/2/07 the NST’s headlines screams ‘Delivery’. There are 23 thumbnail pictures of people picked by Nor Mohd Yaacob to sit on a ‘Task Force’ committee to improve the Government’s delivery mechanism.
The next day on 9/2/07 the headlines shouts out ‘It’s A Record - RM 1,069,000,000,000 - Malaysia’s annual total trade breaks RM1 trillion mark for the first time’
But the reality on the ground is otherwise.
Recovery policies put in place by Dr Mahathir in his last years in office saw the economy growing from 4.5% in 2003 to 5.7 % in 2004 and finally topping off at 6.2% in 2005.
In Section 15 of Subang Jaya many shops are closing down. On Pulau Langkawi whole sections of Kuah town are dead. In Putrajaya the Anjung and Lanai commercial areas have been shut down completely and now the Alamanda commercial area is also slowing down. In Kelana Jaya a nasi kandar restaurant will be closing down soon because a LimKokWing campus nearby has also closed. People who own apartments in Selayang and Subang Jaya cannot find tenants to rent them for over one year. They remain empty.
That was the last bit of momentum leftover from Dr Mahathir’s management of the country.
Economy on Downhill Since Badawi Became PM
Ever since then it has been downhill all the way.
Badawi’s sleeping on the job since 2003 is taking its toll on the Malaysian economy.
Economic growth went down to 5.8% in 2006. For 2007 the official forecast by the Treasury is that the economy will go down again to 5.2%.
Three straight years of slower economic growth.
Dr Mahathir has said that even these figures cannot be trusted. The real scenario could be worse.
And now Abdullah Badawi has given this ‘Delivery’ Task Force six months to show results. And here is the real non starter - the Task Force is headed by two chairmen one a Malay representing the Civil Service and the other a Chinese representing the private sector.
This task force is NOT going to work. It is just for show.
The feel good spin is also being boosted through the KLCI which has reached 1,245 by 8/2/07 – up from 970 in November 06, a fantastic surge of almost 30% in just three months.
Artificial Propping-up of the Stock Exchange
A senior stockbroking CEO says that money is being pumped into the main ‘Index Counters’ (about 17 of them) that are heavyweights on the KLCI.
If you push up these heavyweight counters, the whole KLCI will move. Other than these Index counters, other blue chips and non blue chips and second liners have not seen any surge in price at all.
Also a lot of money is being used to prop up the KLCI. Government owned institutional investors are obviously being roped in to boost the feel good factor.
The Bursa also announced recently that short selling will be allowed. Short selling can make you a lot of money if you know for certain that the market is going down.
Hypothetically if all the Government owned institutional players decide to dump their shares at the same time, the stock market will hit the floor.
And if the ‘players’ have sold ‘short’ they will make a double killing i.e. from selling their shares at a high price and shorting the market at a low price. This can only happen when you control both the buying and the selling of shares. And of course this is a hypothetical case only.
Forex traders of the 1990s will recall the tactics used by Bank Negara to speculate the Ringgit against other currencies. Since Bank Negara was the caretaker of monetary policy which determined the value of the Ringgit, they wanted to use this ‘inside’ knowledge at that time to make some money on the side.
We all know what eventually happened. We lost RM27.0 billion.
So if there is a snap election when will it be? A KLCI at 1245 is artificial.
How do we know this?
The non Index and non blue chips are NOT moving. They CANNOT boost the KLCI forever. It has to find its natural level – it may come down hard.
Snap elections may be held before this event takes place – much sooner than expected. Get out your voting shoes.