Sunday, September 28, 2008

Unbridled American-led Free Market Economy Unbundling...

"Again, how immeasurably greater is the pleasure, when a man feels a thing to be his own; for surely the love of self is a feeling implanted by nature and not given in vain, although selfishness is rightly censured; this, however, is not the mere love of self, but the love of self in excess, like the miser's love of money; for all, or almost all, men love money and other such objects in a measure. And further, there is the greatest pleasure in doing a kindness or service to friends or guests or companions, which can only be rendered when a man has private property."
~ Aristotle, Politics, Book II, Part V

I have always wondered how financial markets work, especially the humongous bubble leveraged on staggering multiples of supposed assets or investments.

How is it that when one 'invests' big or bigger, one can then create even bigger borrowed volumes of trade? Frequently these so-called educated ingeniously 'hedged' speculations are supposedly to help stabilise wilder fluctuations in volatile markets, well... what now?

Hedge funds and derivatives trading (and other so-called structured financial options) have now shown up its true colours—it's not green, and many if not most entities are now in the deep red!

It began with the sub-prime loans debacle where unqualified and risky borrowers were given uncharacteristically preferential mortgage interest rates well below market levels. Wikipedia describes this as "Subprime lending is the practice of making loans to borrowers who do not qualify for market interest rates owing to various risk factors, such as income level, size of the down payment made, credit history, and employment status." [For a cartoon powerpoint subprime made easy...]

Many therefore were borrowing more than they can afford to remortgage or pay back, some were holding on to such 'cheap' holdings as investments in lieu of hard cash and other more volatile stocks and shares; and defaulting in huge numbers. Foreclosures therefore spiral upwards. (For a good analysis, see Jakarta Post 'The Tumbling of Giants")

Then, the soaring crude oil and commodities price hike triggered and unravelled the tenuous hold on liquidity. Savings and loans banking entities as well as insurers were all caught in a vicious web of interlocking downward spiral of near worthless returns. Then, Bear Sterns went under, the Federal Home Loan Mortgage Corporation (Freddie Mac) and Federal National Mortgage Association (Fannie Mae) collapse, the Lehman Brothers chapter 11 protection, Merrill Lynch, Washington Mutual shock and worst of all the huge AIG collapse...

Now, the US with a panicky but hapless President George W Bush, is trying to cobble together the biggest bail-out the world has ever seen—USD 700 billion! This, purportedly to forestall the collapse of the world's largest economy and potentially triggering a global economic meltdown! It appears that the rooster has come home to roost.

Some 10 years ago during the Asian financial crisis, respected economists worldwide but especially American, were all pushing the then battered economies to accept the collapse and rapid-fire restructuring while the IMF and World Bank called all the shots, not withstanding the terrible social upheavals and shocks. (see Times' How Asia's Bankers Avoided Crisis)

Many home-spun corporations were quickly sold to foreign fund managers and multinationals. Huge numbers of the local population were bankrupted and impoverished, with some of the most traumatised resorting to rioting with ethnic overtones... Then, it was said that this was an acceptable phase of change for the better...

Thus, it is so ironic that the Americans are changing its tune—turning its own economic model on its head, and calling for such a blatant if callous bail-out! By protecting these huge corporations, it may be earnestly helping to prevent a severe meltdown. However, it is feared that it might also be protecting those perpetrators who had wallowed in profligate, wanton greed and obscene wealth acquisition for so long, with the addiction and mentality of casino gamblers of gargantuan proportions!!!

Naturally, the American citizen is not amused, with more than 90% of them feeling that they the taxpayers should not be bailing out these corrupt officials (that they should not profit in any way from their mistakes), while at the same time urging the lawmakers to ensure the sanctity of their mortgages, their savings and their pensions. Furthermore, more conservative Republican Americans are still opposed to dismantling the free-market system which they feel should not see a return to more governmental oversight (see Conservatives Viewed Bailout Plan as Last Straw)

Asian economists are now feeling even more betrayed and angry. They now realise that the world is truly unequal. "Do as I say but not as I do" appears to be the American model of free-market capitalism. (See Does financial bailout show US double standards?) Many people refuse to acknowledge that deep down (perhaps for fear of offending the superpower USA), there has always been an American 'exceptionalism' clause where its citizens and its interests reign supreme and supersedes everyone else's... Its benign power is evident only when its interests are protected or extended.

Perhaps, it is time for the US to eat humble pie and acknowledge that it alone cannot provide all the answers and solutions to our immensely complex and chaotic world. Perhaps, the US can help to finally strengthen its own flawed institutions by reinforcing more institutional oversight guidelines and regulations (not less!). In so doing, America might then recover its vaunted capacity to export good ideas and ideals, but perhaps more by example than by other devious means of influence and subtle and not so subtle coercion.

Perhaps the free trade agreements so aggressively pushed with many countries, should be revisited or even revised to acknowledge each and every country's inflexible interests, which are already in place in several clauses of the American agreement, but which many countries sheepishly enter into because of the so-called USA-driven market size...

Gross excesses during the past few decades were often apologetically rationalised away by the weight of US-trained and US-indoctrinated economists worldwide, such that alternative models have been left by the wayside. Socially-conscientious or directed mechanisms, safety net issues are almost taboo in the modern paradigm of this now shaky economic model. Continental European economic models with stronger social protections appear to have withstood better the current financial storm. (see Why the world will avoid Armageddon)

Thus, perhaps older Europe can play a bigger role in today's world in helping to reshape and restructure the world's economy. Perhaps, the Asian model of guided and government-regulated free-market models can find a more respectable place where control and regulations still exact a modicum of fear and responsibility from the crass extremes of unbridled greed and speculation.

Not being trained as an economist, helps to picture in my simple mind that there really is no free lunch. That one plus one may be 2, 3 or even 5, may be plausible. But 100 or 10,000 (!!!?), this seems just too far-fetched, too stretched beyond the imagination of unsophisticated mortals who deal with simple multiples in hoped-for returns from investments for one's future.

But we have of late let some award-winning theoretical free-market economists propagate attractive if mindboggling concepts of mathematical if unreal 'imaginary' numbers of market possibilities.

The past 2 decades or so have seen newfangled economic theories fanning a mentality of voracious greed to reap enormous profits and pay-outs, seemingly on an erstwhile unending gravy train of limitless resources. This belief has spurred that exponential urge to spend, speculate, guesstimate or gamble beyond one's monetary worth or capacity...

Following the 1987 global recession, we seemed to have embarked on a roller coaster ride of mainly positive growth of exponential proportions, with a spectacular rise in a middle class population worldwide. [See Henry Liu's essay on The Coming Trade War and Global Depression (2005)]

Free market capitalism and mass consumerism swept the world in an unprecedented success story which saw the demise of the communist-socialist model beginning with the 1989 dismantling of the Soviet Union.

Excesses and poor judgements by many aspirant developing countries on fast track growth led to the Asian Tom Yam crisis of 1997-98—this disaster crippled and decimated many third world nations and led to enforced hugely unpopular infusions of IMF and World Bank measures and funds.

Governmental bail-outs were frowned upon, and this 'shock and awe' model was proposed as the necessary bitter medicine which will eventually salve all economic hurts and wounds, notwithstanding the social upheavals which were unleashed in nations such as Indonesia, Thailand, South Korea and even in Malaysia...

In the long run, this approach was supposed to enhance economic strength and stability of the individual countries involved, where freer markets with foreign funds and investments, inflows or outflows, would be unhampered. It also presupposed that regulatory frameworks be simplified to the point of being ineffectual—it appears that Milton Friedman's school of economics was once again given free reign to transform new nations, new markets...

Only that this approach is supposed to allow individual/personal ingrained self-interest and 'greed' to ride supreme and therefore encourage a trickle down effect to finally eradicate poverty. Because, everyone as homo economicus should in theory be capable of finding their own true worth and place in today's world—they should be able to pull themselves up by their own bootstraps, unassisted, as this would artificially weaken the model...

Yet, despite this proposed unapologetic hard-nosed approach, most nations found that they could not accept the unvarnished practicality in toto, that, it was and remains an unforgiving mindless system which unfairly punishes the weak, the marginalised, the less capable, the less endowed. Pitiable safety nets had to be set up as glossy corporate social responsibility measures, often placed at the bottom rung of economic need or even consciousness...

Hence, while enormous wealth has been generated, enlarging a bigger than ever middle class, this paradigm has also enhanced the rich-poor divide (socioeconomic inequality measure, the Gini index).

As the nouveau riche empowered entrepreneurial and the investment savvy speculators pile on wealth and acquire more and more consumer goods and services, the left-behind and marginalised continue to fester in the underbelly of privation and hardship.

This growing destitute class seethes with anger, envy and appears readily to slip into disaffection with resultant tendencies toward potential violent, vengeful, anti-social behaviour—the stuff that begets urban anarchists, religious fanatics, jihadists, other mindless mobs totally opposed to the 'western' model of the world!

Extreme wealth disparity which breeds social dystopia—where an increasing populace feels miserable, dispossessed, disempowered and oppressed—is a real danger to a peaceful, progressive harmonious world.

Notwithstanding the ascendancy of economics and finance in the world today, the recent financial meltdown is a timely reminder that economics is never a hard science if ever, and whichever economic model cannot be the one and only foolproof unchanging model for the world.

It is precisely because mankind is quite unique in the biosphere of this one Earth, that he thrives relentless. With his/her multifarious activities, preferences and free choices, mankind represents the non-linear chaotic paradigm of fully evolved animal life.

What makes the first human from Africa migrate outwards around the globe, will never be known. But our proliferation globally into every nook and cranny of the planet attest to our tenacious grasp for life.

By testing the limits of his/her physical ability, intellectual prowess, artful skills at extending him-/herself through arms, appendages, then barter trades and finally financial alternatives, man has become that quintessential homo economicus.

Sadly, the long arms and tentacles of human reach can be too impactful, too abrasive even. Our human lives now extends through pervasive interweaving impacts and ubiquitous interconnectedness, changing nearly everything it touches...

But with our innate nature which makes everyone of us free to choose and to want for personal property, he is also ultimately, unpredictable...

An abridged version of this appears in malaysiakini as
American capitalism unravelling

Tuesday, September 23, 2008

Malaysia must Change for the Better, no Ifs, no Buts...

Malaysiakini published a version of this as an opinion piece on 25.09.08

Raja Petra sent to Kamunting
The government's continued disregard and disdain for the Malaysian public boggles the mind.

It also shows its precipitous descent into a beleaguered mindset of a morally-emaciated misdirected authority, seemingly grasping at whichever convenient straws to prop up its crumbling foundations...

Instead of listening to and reflecting on the wishes and aspirations of an increasingly vocal rakyat, it continues to wallow in a fossilised mentality that 'might is right', as long as it continues to believe and hold on to the majoritarian trump card.

Sadly, but perhaps hopefully this might just change in the next few days or weeks—many Malaysians are praying and hoping for change for the better.

The current leadership appears to subscribe to the view that it alone holds all the puissance and licence for arbitrary diktats of obsolete inequitable laws, hollow-sounding rhetoric and cheap propaganda.

Somehow it seems to have become shell-shocked into an impervious barricade of seeing no evil, hearing no evil but speaking and acting with callous and vilest evil—hitting back with whatever they've got the power to lash out! It appears to be clinging on to whatever little power it has left—which is dwindling day by day; worse it appears to be losing relevance, in the eyes of an earnest rakyat. (See BN dynasty crumbling, says Bukit Bendera MP)

Shockingly, even our past PM Tun Dr Mahathir has decried the current administration as inept. He said that the government now commands much less support than it did after the recent general election, but rather than share the public's urgency for change, the present office-holders had "redoubled efforts to frustrate renewal, cut off reform, and silence criticism".

It has inflexibly steeled itself from having to shift gears in a much changed Malaysian political reality since March 8, 2008, that ensconced racial and ethnic divisions which had previously been battened down, are passé.

By steadfastly holding on to the concept of and playing up the divisive if dumbed-down special unequal sectarian rights, the current leadership appears to be foundering on a dessicated landscape of enlightened global visions and aspirations for greater inclusivity and equality—that the quest for basic human rights cannot stop at narrowly-defined sectarian exclusivity or political expediencies.

The now much maligned Ketuanan Melayu catchphrase, with its expectant master-follower relationship appears to have lost its jingoistic power to inflame fear and privation for an increasingly sophisticated rakyat, at least for a sizeable number.

It is true that many Malays and bumiputras continue to fear that once this interpretation of exceptional right is taken away from them, they might not be favoured anymore and would be sidelined, even marginalised in their so-called 'own homeland'. This is a very real and rightful concern, and all Malaysians must be mindful that this does not and should never happen.

But I think every thinking Malaysian understands this perspective which has been ingrained into the psyche for so long, that this has become an immovable crutch reinforcing a diffident yet hand-out frame of mind.

We must all work together to ensure that fairness—even if with initial overweening affirmation to reassure our Malay and bumiputra brethren be justly extended—based on social need rather than simply birthright, be the paradigm of the new Malaysian model, with eradication of all leakages and wastages from corrupt and other venal interests.

I strongly believe our economic pie is big enough for all. I believe our collective potential is even greater when we can all work together without unspoken but seething suspicion, envy or disgruntlement.

There's really no necessity for fear of being excluded of fair opportunities for any Malaysian, as I fervently believe that every Malaysian will always have a soft spot for the poor, the marginalised and the truly deprived. 50 years of living together in relative peace and harmony would and should ensure that common sense and goodwill will prevail.

I believe we are more magnanimous and generous than we have been given credit for. A socially-engineered liberalism with an ethnically-blind and equitable social contract, will ensure that untrammelled market forces not be allowed to override the sensitivities and needs of those truly in need.

That every Malaysian will be accorded every fundamental right to a decent home, wages, access to basic amenities and health care, basic rights and freedom to associate, to think, to speak, to write and to believe.

That quality and merit must supersede all pretensions of enforced arbitrary allocations, to education, business, housing, employment, even social welfare, which can only make our nation and economy, our productivity and yes, especially our Malaysian nationalistic fervour stronger and more meaningful. That we can all shout out loudly and passionately with one unison voice that we are Bangsa Malaysia!

In a globalised world, this can only add on to our previously unimagined strength, rather than serve as a deadweight anchor dragging us slowly but inexorably into inefficiency, corruption, nepotism, dependency and poorer than can be achieved productivity...

In the past few years, this has become more evident with our sharply declining economic growth as the chasing developing world continues to progress in spite of us and our fantastic head-start.

We're now beginning to showcase our wasted, weighted-down, demoralised human capital achievement, which has now become even more tangible with the rise and rise of resurgent dynamic economies of China, India, Vietnam, Thailand and even Indonesia! With the current financial meltdown and banking debacle, we have to be even more resilient, otherwise we can expect worse to come... (See Bursa plunges nearly 4%, recovery in afternoon)

Ketuanan Rakyat must now be the new shibboleth for Malaysians now more confident of and attuned to fairplay and global competition.

We must continue to reinforce and burnish this quest for greater personal and national achievement, empowerment and excellence. We must learn to aspire to be world-beaters and not simply be content as jaguh kampung (village champions).

Malaysia Boleh
and must change for the better!

(photos from The Malaysian Insider, ISA graphic from malaysiakini)

Saturday, September 13, 2008

Oh Malaysia! Whither is thy just soul for all?

I decided last month to take a break from my erstwhile blogging, if anything just to sniff through the musty air for some balance, some freshness,
some insights for sanity...

Alas, during and following the Permatang Pauh by-election, Malaysian politics had descended into crasser and baser meanness.

Torrid mud-slinging wasn't enough, and when the chips and popular support appear to be slipping further down, ethnic emotions have been stoked and charged upwards, with growing senseless and ad hominem rhetoric rising decibels into deaf-piercing levels of plangency.

Personal and racial attacks have taken on an ugly momentum which only breeds a nuclear cycle of chain-reaction—with irrational fears and bigotry serving as fodder for mass incitement into hatred and jitteriness.

Political thuggery appears to have taken leave of the senses of some of our inane politicians, such that one wonders if we are living in a banana republic as currently exemplified by the chronically self-destructive Zimbabwe, Somalia and other failed states.

Perhaps, as passionate Malaysians who hanker for a renewed Malaysia to emerge as a developed first world nation, we are expecting too much. It is painfully clear that we have yet to be able to mature gracefully, without the insane retreat into tribalism and narrow-minded sectarianism.

In this regard I totally agree with Azly Rahman that we can do better and hopefully soon, we must "celebrate the end of racism with the sinking of Bahtera Merdeka. For too long race and religion has been used a twin-concept of fear and domination of those robber-barons who call themselves nationalists in a post-industrial tribalistic world." (see September 16: the end of nationalism and tribalism?)

Sadly, the embattled government is playing straight into the hands of a small band of unthinking, asinine 'territorial warloads', whose locked-in mindsets appear to be to protect or to preserve their parochial fiefdoms, now so overtly taken away from them since March 8, 2008.

The current leadership seems to have become tone-deaf to the rakyat's rising concerns and interests, supplanting these with erroneous and foolhardy tactics to stay in power at whatever costs!

The sudden removal of fuel subsidies, the hike in utilities rates, and the greatest inflation (7.7% then 8.3% in June and July 2008, respectively) ever in 27 years, have jolted the rakyat that this current government is fast losing its grip on reality and has lost its commitment to serve its citizens. (Latest August 2008 CPI at a whopping 8.5%, another 27-year record!!!)

Thus, isn't it understandable that more and more of the rakyat has joined in the rousing call to urge the government to be more accountable and fair, with clarion calls to place the rakyat’s interests first, to eliminate wasteful projects, cronyistic practices and rampant corruption?

Somehow, during these past few years under Pak Lah, the government has become impenetrable and impervious to the reality bites and bytes of an evolved emboldened rakyat who are clamouring for greater transparency, freedom of expression, and participatory engagement.

Most importantly, the urgent need to change from the archaic model of patently racial divide and rule, into one of greater participation and inclusion, sans ethnic or religious compartmentalisation. It is fervently hoped that race-based political parties might indeed be passé, soon in modern 21st century Malaysia.

But the emergence, rising popularity and acceptance of Pakatan Rakyat as a collaborative and viable if cobbled-up opposition front is frighteningly clairvoyant, of political changes to come. Such consistent opposition gains pose a severe threat to those hopelessly clinging on to power from their ingrained stranglehold of outdated top-down Umno-dominated politics and policies!

This sudden realisation of power loss, public disenchantment and disavowal, has made many an old-school politician queasy at the real possibility and prospect of becoming irrelevant, discredited and disempowered!

I am writing this during my lay-over in Dubai, en route to London, accompanying my son who is to begin his university studies at King's College.

Just before I left, my heart sank. Although we had feared that a desperate, embattled government might resort to whatever means to hold on to its challenged power, we had naively harboured thoughts that perhaps sanity and good sense would prevail. Alas, this was not to be so.

We heard that blogger-extraordinaire of Malaysia Today, Raja Petra Kamaruddin had been detained under Section 73(1) of the Internal Security Act (ISA), i.e. detention without trial! This morning, half a day later, we heard that opposition (DAP) law-maker Teresa Kok and Sin Chew Daily Tan Hoon Cheng had also been detained under this totally discredited and antiquated draconian ISA.

Newspapers, which had exposed the antics of this racist taunt, were also given show-cause letters as to why they should not be sanctioned! Flying in the face of natural justice is this ludicrous and totally misguided move to sanction and punish the exposers and not the actual perpetrators of this terrible racially charged misdeed!

Ironically indeed, the centre of the storm of these racist remarks and extremism—one previously unheard of but unrepentant UMNO chieftain—has simply been given a slap on the wrist: suspended for 3 years from all UMNO posts!

These rafts of undignified and uncalled for actions are to be condemned in the strongest terms. It would appear that the government headed by UMNO is stating in effect that if only the journalist hadn't reported (and the media hadn't exposed this!) on these outrageous remarks by that racist UMNO chief, then there would not have been any knowledge of this simmering racial tension, deviously stoked by this repugnant man and his coterie of supporters.

Never mind that selected people on the ground had already been inflamed, and jolted in their many targeted pockets about possible ethnic fears and strifes... that 'immigrant' and 'squatting' races don't need to be considered as citizens, and that they can leave the country, if they do not like the current policies!

Oh, how can we peaceful Malaysians counter such bigotry, such calls for racial purity and protection which harks back to the days of Hilterism and Nazist ideology, or former South African apartheid regime?! How can we ever hope to rebuild a newer more inclusive society that protects the rights and sanctity of all?

Worse this government is now resorting to all sorts of draconian laws to further extend itself, consolidate its eroding popularity and power, and repress disgruntlement from a fractiously impatient and angry rakyat clamouring for greater and greater freedom and change for the better!

As 'puny' rakyat there appears to be only so much that we can do, but each and everyone of us must rise up and speak our mind for justice, fairness, freedom to express and live, with due protection of our laws and our Constitution.

We must not let ourselves be intimidated by these new fear-instilling extra-judicial acts from our common purpose to rid Malaysia of such excesses of governmental decadence!

While we abhor and eschew all forms of violence, we urge the government to respect the rakyat's wishes and not dampen and dumb down our efforts to be heard!

By deceitfully creating a climate of fear and uncertainty, this government must not be allowed to fan and provoke public unrest. This would be to play into the hands of this beleaguered and unpopular leadership waiting to unleash possible emergency laws to promulgate and propagate their power indefinitely.

We urge our peace- and freedom-loving Malaysians to pray and speak out for the better good of our nations. I don't believe we are alone in this.

The world is watching, and we cannot allow this government to ride roughshod over all of us. The USA has already summoned our embassy staff to protest. Amnesty International and Human Rights Watch are condemning this desperate act of our current leadership.

Even the government's own de facto law minister Zaid Ibrahim has protested these actions which he felt were totally inexcusable and has threatened to resign (see Law minister threatens to quit over ISA).

Thus, how can any sensible Malaysian view this differently, if not to believe that these dastardly acts reek of pure political overtures of cynical overkill and power play? Zaid Ibrahim has stated that "We have a government that commits to laws and reforms, we can't be using old-style politics or resort to creating fear. We have laws and they (the detainees) should be charged in court... The problem with the ISA now is that it is used against certain people, it is a very unjust law."

Another minister (human resources minister) Dr S. Subramaniam has also openly complained that "(t)he prospect of a person being detained without a chance of being heard and to defend himself is against the grains of present day popular belief," and that "a government sensitive to the feelings of the people cannot be blind to the fact that a significant proportion of the rakyat abhor the ISA." (See Another minister questions ISA dragnet)

Let's hope common sense will prevail finally, and a new dawn will rise for a truly resplendent and modern liberated Malaysia.

In the meantime, all Malaysians must call for these freedom fighters to be set free immediately!

This untenable ISA should be repealed and its arbitrary acts must be laid to rest forever!

These repeated acts of political desperation and social injustice seriously undermines the rights and the mandate of the present leadership to govern!

Perhaps, it is truly time for a new rebirth, a new leader, a new government of integrity, greater righteousness, transparency, social cohesiveness and promise, to take over.

Enough is enough, we cannot afford such callous abuse or any more of the same ineptitude to go on and on! It's time to call this government to accounts. It's time to say it's time for change!

"We shall overcome
We shall overcome.
We shall overcome the tyranny of an arrogant, ineffective, incompetent, corrupt and lazy government that
does not have any more respect for the rule of law
does not have any shame in showing its greed and lust
does not have any mercy in using brutal force to silent the voices of change
does not have much respect for the principles of human rights
does not have much intelligence when it comes to parliamentary debates
does not have a clue of what good governance means
does not have any regard for the plight of the poor and their livelihood
does not have any respect for the intelligence of the faculty and students in our universities
does not have any shame in overstaying their welcome
does not have any interest in controlling crime
does not have any will to fight corruption
and does not have leaders that are wide awake,
and does not have any idea that spoiled brats and greedy ones are running the country and finally destroying not only the party but also the nation."
~ Azly Rahman (Victory Speech)

An edited version of this blog appears in Malaysiakini's Time for a Just Malaysia