Public Announcement–Azmi Sharom and Academic Freedom

September 10, 2014

Azmi Sharom and Academic Freedom HARTAL at University of Malaya, KUALA LUMPUR

PM NajibOur government must stand with us in partnership for national development. We Malaysians are not the enemy just because we beg to differ. Indeed we are your source of strength in times of national stress. Please own up to reality, Prime Minister Najib Tun Razak. In our hands lie your political future and premiership. Listen to the voices of dissent and address the underlying causes of our discontent. And demonstrate to us that you have got what it takes to lead us to a future of hope, freedom, and justice, unity and harmony. –Din Merican

This is to remind all UM Alumni and Members of the Public that University of Malaya students and Faculty will hold a hartal in its Pantai Valley, Kuala Lumpur campus today. All are welcome to this peaceful assembly to support Associate Professor of Law Dr. Azmi Sharom, and stand up for academic freedom.

It is time that we inform our government that dissent in the name of FREEDOM is an integral part of our democracy. A grave injustice has been done to Dr. Azmi Sharom and other civil society activists who dare to speak up on issues of governance, justice, freedom and democracy by the indiscriminate use of the Sedition Act, 1948, a relic from the British colonial era, to achieve political ends.

Harry S TrumanTo quote my favourite American President, Harry Truman, “[O]nce a government is committed to the principle of silencing the voice of opposition, it has only one way to go, and that is down the path of increasingly repressive measures, until it becomes a source of terror to all its citizens and creates a country where everyone lives in fear.”

Our government must stand with us in partnership for national development. We Malaysians are not the enemy just because we beg to differ. Indeed we are your source of strength in times of national stress. Please own up to reality, Prime Minister Najib Tun Razak. In our hands lie your political future and premiership. Listen to the voices of dissent and address the underlying causes of our discontent. And demonstrate to us that you have got what it takes to lead us to a future of hope, freedom and justice, unity and harmony. –Din Merican

Azmi Sharom Hartal

Azmi Sharom Hartal2Azmi Sharom Hartal3

Monetary Policy and Financial Stability by Fed Chair Janet Yellen

July 7, 2014

Chair Janet L. Yellen

At the 2014 Michel Camdessus Central Banking Lecture, International Monetary Fund, Washington, D.C.

July 2, 2014

Monetary Policy and Financial Stability

Janet_Yellen_FEDIt is an honor to deliver the inaugural Michel Camdessus Central Banking Lecture. Michel Camdessus served with distinction as governor of the Banque de France and was one of the longest-serving managing directors of the International Monetary Fund (IMF).

In these roles, he was well aware of the challenges central banks face in their pursuit of price stability and full employment, and of the interconnections between macroeconomic stability and financial stability. Those interconnections were apparent in the Latin American debt crisis, the Mexican peso crisis, and the East Asian financial crisis, to which the IMF responded under Camdessus’s leadership. These episodes took place in emerging market economies, but since then, the global financial crisis and, more recently, the euro crisis have reminded us that no economy is immune from financial instability and the adverse effects on employment, economic activity, and price stability that financial crises cause.

The recent crises have appropriately increased the focus on financial stability at central banks around the world. At the Federal Reserve, we have devoted substantially increased resources to monitoring financial stability and have refocused our regulatory and supervisory efforts to limit the buildup of systemic risk. There have also been calls, from some quarters, for a fundamental reconsideration of the goals and strategy of monetary policy. Today I will focus on a key question spurred by this debate: How should monetary and other policymakers balance macroprudential approaches and monetary policy in the pursuit of financial stability?

In my remarks, I will argue that monetary policy faces significant limitations as a tool to promote financial stability: Its effects on financial vulnerabilities, such as excessive leverage and maturity transformation, are not well understood and are less direct than a regulatory or supervisory approach; in addition, efforts to promote financial stability through adjustments in interest rates would increase the volatility of inflation and employment. As a result, I believe a macroprudential approach to supervision and regulation needs to play the primary role. Such an approach should focus on “through the cycle” standards that increase the resilience of the financial system to adverse shocks and on efforts to ensure that the regulatory umbrella will cover previously uncovered systemically important institutions and activities. These efforts should be complemented by the use of countercyclical macroprudential tools, a few of which I will describe. But experience with such tools remains limited, and we have much to learn to use these measures effectively.

I am also mindful of the potential for low interest rates to heighten the incentives of financial market participants to reach for yield and take on risk, and of the limits of macroprudential measures to address these and other financial stability concerns. Accordingly, there may be times when an adjustment in monetary policy may be appropriate to ameliorate emerging risks to financial stability. Because of this possibility, and because transparency enhances the effectiveness of monetary policy, it is crucial that policymakers communicate their views clearly on the risks to financial stability and how such risks influence the appropriate monetary policy stance. I will conclude by briefly laying out how financial stability concerns affect my current assessment of the appropriate stance of monetary policy.

Balancing Financial Stability with Price Stability: Lessons from the Recent Past

When considering the connections between financial stability, price stability, and full employment, the discussion often focuses on the potential for conflicts among these objectives. Such situations are important, since it is only when conflicts arise that policymakers need to weigh the tradeoffs among multiple objectives. But it is important to note that, in many ways, the pursuit of financial stability is complementary to the goals of price stability and full employment. A smoothly operating financial system promotes the efficient allocation of saving and investment, facilitating economic growth and employment. A strong labor market contributes to healthy household and business balance sheets, thereby contributing to financial stability. And price stability contributes not only to the efficient allocation of resources in the real economy, but also to reduced uncertainty and efficient pricing in financial markets, which in turn supports financial stability.

Despite these complementarities, monetary policy has powerful effects on risk taking. Indeed, the accommodative policy stance of recent years has supported the recovery, in part, by providing increased incentives for households and businesses to take on the risk of potentially productive investments. But such risk-taking can go too far, thereby contributing to fragility in the financial system.1 This possibility does not obviate the need for monetary policy to focus primarily on price stability and full employment–the costs to society in terms of deviations from price stability and full employment that would arise would likely be significant. I will highlight these potential costs and the clear need for a macroprudential policy approach by looking back at the vulnerabilities in the U.S. economy before the crisis. I will also discuss how these vulnerabilities might have been affected had the Federal Reserve tightened monetary policy in the mid-2000s to promote financial stability.

Looking Back at the Mid-2000s

Although it was not recognized at the time, risks to financial stability within the United States escalated to a dangerous level in the mid-2000s. During that period, policymakers–myself included–were aware that homes seemed overvalued by a number of sensible metrics and that home prices might decline, although there was disagreement about how likely such a decline was and how large it might be. What was not appreciated was how serious the fallout from such a decline would be for the financial sector and the macroeconomy. Policymakers failed to anticipate that the reversal of the house price bubble would trigger the most significant financial crisis in the United States since the Great Depression because that reversal interacted with critical vulnerabilities in the financial system and in government regulation.

In the private sector, key vulnerabilities included high levels of leverage, excessive dependence on unstable short-term funding, weak underwriting of loans, deficiencies in risk measurement and risk management, and the use of exotic financial instruments that redistributed risk in nontransparent ways.

In the public sector, vulnerabilities included gaps in the regulatory structure that allowed some systemically important financial institutions (SIFIs) and markets to escape comprehensive supervision, failures of supervisors to effectively use their existing powers, and insufficient attention to threats to the stability of the system as a whole.

It is not uncommon to hear it suggested that the crisis could have been prevented or significantly mitigated by substantially tighter monetary policy in the mid-2000s. At the very least, however, such an approach would have been insufficient to address the full range of critical vulnerabilities I have just described. A tighter monetary policy would not have closed the gaps in the regulatory structure that allowed some SIFIs and markets to escape comprehensive supervision; a tighter monetary policy would not have shifted supervisory attention to a macroprudential perspective; and a tighter monetary policy would not have increased the transparency of exotic financial instruments or ameliorated deficiencies in risk measurement and risk management within the private sector.

Some advocates of the view that a substantially tighter monetary policy may have helped prevent the crisis might acknowledge these points, but they might also argue that a tighter monetary policy could have limited the rise in house prices, the use of leverage within the private sector, and the excessive reliance on short-term funding, and that each of these channels would have contained–or perhaps even prevented–the worst effects of the crisis.

A review of the empirical evidence suggests that the level of interest rates does influence house prices, leverage, and maturity transformation, but it is also clear that a tighter monetary policy would have been a very blunt tool: Substantially mitigating the emerging financial vulnerabilities through higher interest rates would have had sizable adverse effects in terms of higher unemployment. In particular, a range of studies conclude that tighter monetary policy during the mid-2000s might have contributed to a slower rate of house price appreciation. But the magnitude of this effect would likely have been modest relative to the substantial momentum in these prices over the period; hence, a very significant tightening, with large increases in unemployment, would have been necessary to halt the housing bubble.2 Such a slowing in the housing market might have constrained the rise in household leverage, as mortgage debt growth would have been slower. But the job losses and higher interest payments associated with higher interest rates would have directly weakened households’ ability to repay previous debts, suggesting that a sizable tightening may have mitigated vulnerabilities in household balance sheets only modestly.3

Similar mixed results would have been likely with regard to the effects of tighter monetary policy on leverage and reliance on short-term financing within the financial sector. In particular, the evidence that low interest rates contribute to increased leverage and reliance on short-term funding points toward some ability of higher interest rates to lessen these vulnerabilities, but that evidence is typically consistent with a sizable range of quantitative effects or alternative views regarding the causal channels at work.4 Furthermore, vulnerabilities from excessive leverage and reliance on short-term funding in the financial sector grew rapidly through the middle of 2007, well after monetary policy had already tightened significantly relative to the accommodative policy stance of 2003 and early 2004. In my assessment, macroprudential policies, such as regulatory limits on leverage and short-term funding, as well as stronger underwriting standards, represent far more direct and likely more effective methods to address these vulnerabilities.5

Recent International Experience

Turning to recent experience outside the United States, a number of foreign economies have seen rapidly rising real estate prices, which has raised financial stability concerns despite, in some cases, high unemployment and shortfalls in inflation relative to the central bank’s inflation target.6 These developments have prompted debate on how to best balance the use of monetary policy and macroprudential tools in promoting financial stability.

For example, Canada, Switzerland, and the United Kingdom have expressed a willingness to use monetary policy to address financial stability concerns in unusual circumstances, but they have similarly concluded that macroprudential policies should serve as the primary tool to pursue financial stability. In Canada, with inflation below target and output growth quite subdued, the Bank of Canada has kept the policy rate at or below 1 percent, but limits on mortgage lending were tightened in each of the years from 2009 through 2012, including changes in loan-to-value and debt-to-income caps, among other measures.7 In contrast, in Norway and Sweden, monetary policy decisions have been influenced somewhat by financial stability concerns, but the steps taken have been limited. In Norway, policymakers increased the policy interest rate in mid-2010 when they were facing escalating household debt despite inflation below target and output below capacity, in part as a way of “guarding against the risk of future imbalances.”8 Similarly, Sweden’s Riksbank held its policy rate “slightly higher than we would have done otherwise” because of financial stability concerns.9 In both cases, macroprudential actions were also either taken or under consideration.

In reviewing these experiences, it seems clear that monetary policymakers have perceived significant hurdles to using sizable adjustments in monetary policy to contain financial stability risks. Some proponents of a larger monetary policy response to financial stability concerns might argue that these perceived hurdles have been overblown and that financial stability concerns should be elevated significantly in monetary policy discussions. A more balanced assessment, in my view, would be that increased focus on financial stability risks is appropriate in monetary policy discussions, but the potential cost, in terms of diminished macroeconomic performance, is likely to be too great to give financial stability risks a central role in monetary policy decisions, at least most of the time.

If monetary policy is not to play a central role in addressing financial stability issues, this task must rely on macroprudential policies. In this regard, I would note that here, too, policymakers abroad have made important strides, and not just those in the advanced economies. Emerging market economies have in many ways been leaders in applying macroprudential policy tools, employing in recent years a variety of restrictions on real estate lending or other activities that were perceived to create vulnerabilities.10 Although it is probably too soon to draw clear conclusions, these experiences will help inform our understanding of these policies and their efficacy.

Promoting Financial Stability through a Macroprudential Approach

If macroprudential tools are to play the primary role in the pursuit of financial stability, questions remain on which macroprudential tools are likely to be most effective, what the limits of such tools may be, and when, because of such limits, it may be appropriate to adjust monetary policy to “get in the cracks” that persist in the macroprudential framework.11

In weighing these questions, I find it helpful to distinguish between tools that primarily build through-the-cycle resilience against adverse financial developments and those primarily intended to lean against financial excesses.12

Building Resilience

Tools that build resilience aim to make the financial system better able to withstand unexpected adverse developments. For example, requirements to hold sufficient loss-absorbing capital make financial institutions more resilient in the face of unexpected losses. Such requirements take on a macroprudential dimension when they are most stringent for the largest, most systemically important firms, thereby minimizing the risk that losses at such firms will reverberate through the financial system. Resilience against runs can be enhanced both by stronger capital positions and requirements for sufficient liquidity buffers among the most interconnected firms. An effective resolution regime for SIFIs can also enhance resilience by better protecting the financial system from contagion in the event of a SIFI collapse. Further, the stability of the financial system can be enhanced through measures that address interconnectedness between financial firms, such as margin and central clearing requirements for derivatives transactions. Finally, a regulatory umbrella wide enough to cover previous gaps in the regulation and supervision of systemically important firms and markets can help prevent risks from migrating to areas where they are difficult to detect or address.

In the United States, considerable progress has been made on each of these fronts. Changes in bank capital regulations, which will include a surcharge for systemically important institutions, have significantly increased requirements for loss-absorbing capital at the largest banking firms. The Federal Reserve’s stress tests and Comprehensive Capital Analysis and Review process require that large financial institutions maintain sufficient capital to weather severe shocks, and that they demonstrate that their internal capital planning processes are effective, while providing perspective on the loss-absorbing capacity across a large swath of the financial system. The Basel III framework also includes liquidity requirements designed to mitigate excessive reliance by global banks on short-term wholesale funding.

Oversight of the U.S. shadow banking system also has been strengthened. The new Financial Stability Oversight Council has designated some nonbank financial firms as systemically important institutions that are subject to consolidated supervision by the Federal Reserve. In addition, measures are being undertaken to address some of the potential sources of instability in short-term wholesale funding markets, including reforms to the triparty repo market and money market mutual funds–although progress in these areas has, at times, been frustratingly slow.

Additional measures should be taken to address residual risks in the short-term wholesale funding markets. Some of these measures–such as requiring firms to hold larger amounts of capital, stable funding, or highly liquid assets based on use of short-term wholesale funding–would likely apply only to the largest, most complex organizations. Other measures–such as minimum margin requirements for repurchase agreements and other securities financing transactions–could, at least in principle, apply on a marketwide basis. To the extent that minimum margin requirements lead to more conservative margin levels during normal and exuberant times, they could help avoid potentially destabilizing procyclical margin increases in short-term wholesale funding markets during times of stress.

Leaning Against the Wind

At this point, it should be clear that I think efforts to build resilience in the financial system are critical to minimizing the chance of financial instability and the potential damage from it. This focus on resilience differs from much of the public discussion, which often concerns whether some particular asset class is experiencing a “bubble” and whether policymakers should attempt to pop the bubble. Because a resilient financial system can withstand unexpected developments, identification of bubbles is less critical.

Nonetheless, some macroprudential tools can be adjusted in a manner that may further enhance resilience as risks emerge. In addition, macroprudential tools can, in some cases, be targeted at areas of concern. For example, the new Basel III regulatory capital framework includes a countercyclical capital buffer, which may help build additional loss-absorbing capacity within the financial sector during periods of rapid credit creation while also leaning against emerging excesses. The stress tests include a scenario design process in which the macroeconomic stresses in the scenario become more severe during buoyant economic expansions and incorporate the possibility of highlighting salient risk scenarios, both of which may contribute to increasing resilience during periods in which risks are rising.13 Similarly, minimum margin requirements for securities financing transactions could potentially vary on a countercyclical basis so that they are higher in normal times than in times of stress.

Implications for Monetary Policy, Now and in the Future

In light of the considerable efforts under way to implement a macroprudential approach to enhance financial stability and the increased focus of policymakers on monitoring emerging financial stability risks, I see three key principles that should guide the interaction of monetary policy and macroprudential policy in the United States.

First, it is critical for regulators to complete their efforts at implementing a macroprudential approach to enhance resilience within the financial system, which will minimize the likelihood that monetary policy will need to focus on financial stability issues rather than on price stability and full employment. Key steps along this path include completion of the transition to full implementation of Basel III, including new liquidity requirements; enhanced prudential standards for systemically important firms, including risk-based capital requirements, a leverage ratio, and tighter prudential buffers for firms heavily reliant on short-term wholesale funding; expansion of the regulatory umbrella to incorporate all systemically important firms; the institution of an effective, cross-border resolution regime for systemically important financial institutions; and consideration of regulations, such as minimum margin requirements for securities financing transactions, to limit leverage in sectors beyond the banking sector and SIFIs.

Second, policymakers must carefully monitor evolving risks to the financial system and be realistic about the ability of macroprudential tools to influence these developments. The limitations of macroprudential policies reflect the potential for risks to emerge outside sectors subject to regulation, the potential for supervision and regulation to miss emerging risks, the uncertain efficacy of new macroprudential tools such as a countercyclical capital buffer, and the potential for such policy steps to be delayed or to lack public support.14 Given such limitations, adjustments in monetary policy may, at times, be needed to curb risks to financial stability.15

These first two principles will be more effective in helping to address financial stability risks when the public understands how monetary policymakers are weighing such risks in the setting of monetary policy. Because these issues are both new and complex, there is no simple rule that can prescribe, even in a general sense, how monetary policy should adjust in response to shifts in the outlook for financial stability. As a result, policymakers should clearly and consistently communicate their views on the stability of the financial system and how those views are influencing the stance of monetary policy.

To that end, I will briefly lay out my current assessment of financial stability risks and their relevance, at this time, to the stance of monetary policy in the United States. In recent years, accommodative monetary policy has contributed to low interest rates, a flat yield curve, improved financial conditions more broadly, and a stronger labor market. These effects have contributed to balance sheet repair among households, improved financial conditions among businesses, and hence a strengthening in the health of the financial sector. Moreover, the improvements in household and business balance sheets have been accompanied by the increased safety of the financial sector associated with the macroprudential efforts I have outlined. Overall, nonfinancial credit growth remains moderate, while leverage in the financial system, on balance, is much reduced. Reliance on short-term wholesale funding is also significantly lower than immediately before the crisis, although important structural vulnerabilities remain in short-term funding markets.

Taking all of these factors into consideration, I do not presently see a need for monetary policy to deviate from a primary focus on attaining price stability and maximum employment, in order to address financial stability concerns. That said, I do see pockets of increased risk-taking across the financial system, and an acceleration or broadening of these concerns could necessitate a more robust macroprudential approach. For example, corporate bond spreads, as well as indicators of expected volatility in some asset markets, have fallen to low levels, suggesting that some investors may underappreciate the potential for losses and volatility going forward. In addition, terms and conditions in the leveraged-loan market, which provides credit to lower-rated companies, have eased significantly, reportedly as a result of a “reach for yield” in the face of persistently low interest rates. The Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation issued guidance regarding leveraged lending practices in early 2013 and followed up on this guidance late last year. To date, we do not see a systemic threat from leveraged lending, since broad measures of credit outstanding do not suggest that nonfinancial borrowers, in the aggregate, are taking on excessive debt and the improved capital and liquidity positions at lending institutions should ensure resilience against potential losses due to their exposures. But we are mindful of the possibility that credit provision could accelerate, borrower losses could rise unexpectedly sharply, and that leverage and liquidity in the financial system could deteriorate. It is therefore important that we monitor the degree to which the macroprudential steps we have taken have built sufficient resilience, and that we consider the deployment of other tools, including adjustments to the stance of monetary policy, as conditions change in potentially unexpected ways.


In closing, the policy approach to promoting financial stability has changed dramatically in the wake of the global financial crisis. We have made considerable progress in implementing a macroprudential approach in the United States, and these changes have also had a significant effect on our monetary policy discussions. An important contributor to the progress made in the United States has been the lessons we learned from the experience gained by central banks and regulatory authorities all around the world. The IMF plays an important role in this evolving process as a forum for representatives from the world’s economies and as an institution charged with promoting financial and economic stability globally. I expect to both contribute to and learn from ongoing discussions on these issues.

1. The possibility that periods of relative economic stability may contribute to risk-taking and the buildup of imbalances that may unwind in a painful manner is often linked to the ideas of Hyman Minsky (see Hyman P. Minsky (1992), “The Financial Instability Hypothesis (PDF),” Leaving the Board Working Paper 74 (Annandale-on-Hudson, N.Y.: Jerome Levy Economics Institute of Bard College, May)). For a recent example of an economic model that tries to explore these ideas, see, for example, Markus K. Brunnermeier and Yuliy Sannikov (2014), “A Macroeconomic Model with a Financial Sector,” Leaving the Board American Economic Review, vol. 104 (February), pp. 379-421. Return to text

2. For a discussion of this issue encompassing experience across a broad range of advanced economies in the 2000s, including the United States, see Jane Dokko, Brian M. Doyle, Michael T. Kiley, Jinill Kim, Shane Sherlund, Jae Sim, and Skander Van Den Heuvel (2011), “Monetary Policy and the Global Housing Bubble,” Leaving the Board Economic Policy, vol. 26 (April), pp. 233-83. Igan and Loungani (2012) highlight how interest rates are an important, but far from the most important, determinant of housing cycles across countries (see Deniz Igan and Prakash Loungani (2012), “Global Housing Cycles,” Leaving the Board IMF Working Paper Series WP/12/217 (Washington: International Monetary Fund, August)). Bean and others (2010), examining the tradeoffs between unemployment, inflation, and stabilization of the housing market in the United Kingdom, imply that reliance on monetary policy to contain a housing boom may be too costly in terms of other monetary policy goals (see Charles Bean, Matthias Paustian, Adrian Penalver, and Tim Taylor (2010), “Monetary Policy after the Fall (PDF),” Leaving the Board paper presented at “Macroeconomic Challenges: The Decade Ahead,” a symposium sponsored by the Federal Reserve Bank of Kansas City, held in Jackson Hole, Wyo., August 26-28). Saiz (2014) suggests that about 50 percent of the variation in house prices during the 2000s boom can be explained by low interest rates, and finds that it was the remaining, “non-fundamental” component that subsequently collapsed–that is, the interest rate component was not a primary factor in what Saiz terms “the bust” (see Albert Saiz (2014), “Interest Rates and Fundamental Fluctuations in Home Values (PDF),” Leaving the Board paper presented at the Public Policy and Economics Spring 2014 Workshops, hosted by the Harris School of Public Policy, University of Chicago, April 8). Return to text

3. The notion that tighter monetary policy may have ambiguous effects on leverage or repayment capacity is illustrated in, for example, Anton Korinek and Alp Simsek (2014), “Liquidity Trap and Excessive Leverage (PDF),” Leaving the Board NBER Working Paper Series 19970 (Cambridge, Mass.: National Bureau of Economic Research, March). Return to text

4. See, for example, Tobias Adrian and Hyun Song Shin (2010), “Liquidity and Leverage,” Leaving the Board Journal of Financial Intermediation, vol. 19 (July), pp. 418-37; and Tobias Adrian and Hyun Song Shin (2011), “Financial Intermediaries and Monetary Economics,” in Benjamin Friedman and Michael Woodford, eds., Handbook of Monetary Economics, vol. 3A (San Diego, Ca.: Elsevier), pp. 601-50. For a study emphasizing how changes in the response of monetary policy to financial vulnerabilities would likely change the relationship between monetary policy and financial vulnerabilities, see Oliver de Groot (2014), “The Risk Channel of Monetary Policy (PDF),” Leaving the Board International Journal of Central Banking, vol. 10 (June), pp. 115-60. Return to text

5. This evidence and experience suggest that a reliance on monetary policy as a primary tool to address the broad range of vulnerabilities that emerged in the mid-2000s would have had uncertain and limited effects on risks to financial stability. Such uncertainty does not imply that a modestly tighter monetary policy may not have been marginally helpful. For example, some research suggests that financial imbalances that became apparent in the mid-2000s may have signaled a tighter labor market and more inflationary pressure than would have been perceived solely from labor market conditions and overall economic activity. Hence, such financial imbalances may have called for a modestly tighter monetary policy through the traditional policy lens focused on inflationary pressure and economic slack. See, for example, David M. Arseneau and Michael Kiley (2014), “The Role of Financial Imbalances in Assessing the State of the Economy,” FEDS Notes (Washington: Board of Governors of the Federal Reserve System, April 18). Return to text

6. For a summary of house price developments across a range of countries through 2013, see International Monetary Fund (2014), “Global Housing Watch.” Leaving the Board Return to text

7. For a discussion of macroprudential steps taken in Canada, see Ivo Krznar and James Morsink (2014), “With Great Power Comes Great Responsibility: Macroprudential Tools at Work in Canada,” Leaving the Board IMF Working Paper Series 14/83 (Washington: International Monetary Fund, May). Return to text

8. See Norges Bank (2010), “The Executive Board’s Monetary Policy Decision–Background and General Assessment,” Leaving the Board press release, May 5, paragraph 28. Return to text

9. See Per Jansson (2013), “How Do We Stop the Trend in Household Debt? Work on Several Fronts,” Leaving the Board speech delivered at the SvD Bank Summit, Berns Salonger, Stockholm, December 3, p. 2. Return to text

10. For a discussion, see Min Zhu (2014), “Era of Benign Neglect of House Price Booms Is Over,” Leaving the Board IMF Direct (blog), June 11. Return to text

11. These questions have been explored in, for example, International Monetary Fund (2013), The Interaction of Monetary and Macroprudential Policies (PDF) Leaving the Board (Washington: IMF, January 29). Return to text

12. The IMF recently discussed tools to build resilience and lean against excesses (and provided a broad overview of macroprudential tools and their interaction with other policies, including monetary policy); see International Monetary Fund (2013), Key Aspects of Macroprudential Policy (PDF) Leaving the Board (Washington: IMF, June 10). Return to text

13. See the Policy Statement on the Scenario Design Framework for Stress Testing at Regulation YY–Enhanced Prudential Standards and Early Remediation Requirements for Covered Companies (PDF), 12 C.F.R. pt. 252 (2013), Policy Statement on the Scenario Design Framework for Stress Testing. Return to text

14. For a related discussion, see Elliott, Feldberg, and Lehnert, “The History of Cyclical Macroprudential Policy in the United States.” Return to text

15. Adam and Woodford (2013) present a model in which macroprudential policies are not present and housing prices experience swings for reasons not driven by “fundamentals.” In this context, adjustments in monetary policy in response to house price booms–even if such adjustments lead to undesirable inflation or employment outcomes–are a component of optimal monetary policy. See Klaus Adam and Michael Woodford (2013), “Housing Prices and Robustly Optimal Monetary Policy (PDF),” Leaving the Board working paper, June 29.

Thanks to Matthew Goldman. For reaction to Chair Janet’s Speech read this:

The Muslim World’s Challenges–Part 1

May 28, 2014

The Muslim World’s Challenges

By Dr Farhan Ahmad Nizami

ISLAMIC PAST: Legacy was built on Muslims’ confidence in Islam, sustained by material prosperity, combined with political and legal stability

Dr Farhan Ahmad NizamiFOR about a thousand years, roughly from the 7th century onwards, the people under Islamic rule made striking advances in their material and intellectual culture.

The contribution of those advances to modern Western philosophy, sciences and technology has been extensively studied. But I want to speak about their distinctively Islamic qualities.

The area under Islamic influence stretched overland from the Atlantic in the west to the borders of China, and across the Indian Ocean to the islands of the Malay archipelago.

This vast area was commercially interconnected with much continuous and profitable exchange of goods. It was also culturally interconnected, with prodigious traffic in books and ideas, scholars and travellers.

Its people busied themselves in seeking knowledge and writing it down. So much so was this that, to this day, there remain huge quantities of manuscripts, from different ends of the Islamic world, yet to be catalogued and studied.

The regional diversity and assimilative embrace of Islam as a civilisation is manifest in the names by which great figures in Islamic scholarship are best known: al-Qurtubi, al-Fasi, al-Iskandari, al-Dimashaqi, al-Baghdadi, al-Isfahani, al-Bukhari, al-Dihlawi and al-Jawi.

The language of communication among scholars was mostly Arabic, with Persian and Turkish becoming important later in the east. This dominance of Arabic was not the result of any policy to diminish local languages. It was simply a gradual extension of the authority of the language of the Quran and its teachings.

Muslims believed that the way of life defined by the Quran summed up the best of the teachings of the past. They expected that non-Muslims, too, would have knowledge, skills and virtues. They expected to learn from them and to fit that learning with Islam.

Islamic civilisation thus self-consciously set out to co-exist with and absorb the cultures of others. It did so from a position of political strength.

The House of Wisdom (Bayt al-Hikma) in Baghdad, funded by the Caliph, is the best-known example of this attitude. Translations were commissioned of works in every branch of learning, from metaphysics to the science of making poisons. Once translated, these works were studied critically, then improved and extended.

The dominant streams in this flood of knowledge were Hellenic, Persian and Indian. The Chinese script proved too severe an obstacle to the absorption of Chinese philosophy and science. However, Chinese influences are found everywhere in the material culture of the Islamic world, in decorative motifs, and in the skills of making paper, ceramics, glass, metal-ware, textiles, dyes and drugs.

The Quran presented the teaching of all God’s messengers as a unified legacy. Muslims set out to harmonise older traditions of learning with that legacy. This effort was not universally admired.

In particular, the presentation of Islamic teachings in the style of Greek philosophy remained controversial for centuries. In the end, it had a more enduring influence on the medieval Christian world than on Islam.

Such controversies did not dampen Muslims’ self-confidence. In general, Islamic norms continued to encourage intellectual adventure and achievement. Muslims were aware of living in prosperous, stable societies, and comfortable with non-Muslim communities among them. They considered themselves forward-looking, inventive and multi-cultured.

Their best scholars made innovations of lasting importance in mathematics and experimental science, and applied them in technical instruments, manufacture, and engineering. And the wealthiest royal courts competed to own and display the results.

Al-Jazari’s famous water-clock illustrates this well. Its water-raising technology is Greek; the elephant, inside which the great vat of water is hidden, represents India, the rugs on its back are Persian; on top of the howdah sits an Egyptian phoenix; on its sides are conspicuously Chinese red dragons. This deliberately multicultural device was constructed shortly after the Crusades.

All that said, while Muslim societies were stable, their governments were often not: regime change was usually violent and disruptive. Politically, the Muslims became ever weaker and more divided.

Little now survives of their cultural self-confidence; even less remains of the personal and political skills they had developed to manage life alongside different communities and confessions.

Their ways of organising long-distance commerce and regulating free markets have vanished completely. The material remains of the rest — all the thinking in all the books, colleges, libraries and hospitals — interest only medievalists, museums, and tourists.

The past still has presence in the public spaces; you still hear the call to prayer, even in secularised city centres. There is still a feel of Islam in private homes and personal manners.

We can objectively map the movements of books, ideas and scholars from one end of the Islamic world to the other in every century until the modern period.

The recovery following the Crusades and Mongol conquests included the building of madrasa and colleges that taught a rich, varied curriculum.

There is little evidence of that during European colonial rule. The madrasa of that era were not well funded. They could afford to focus only on Islamic sciences narrowly defined.

For the rest of their education, Muslims had to leave the cultural space of Islam. A division became established between religious and secular education, between old and modern, with Islam on the side of the old. That division is at the heart of the present challenges facing Muslims in every part of the world.

When we memorialise the legacy of the Islamic past — when naming public institutions, or presenting past glories in books and museums — we should remember that this legacy was built on Muslims’ confidence in Islam.

This confidence was sustained by material prosperity, combined with a sufficient degree of political and legal stability. Without prosperity and stability, the constraints on political and economic decisions are too strong for people to make their own choices for their future.

We need only look at the difficulties in post-recession Europe to know that feeling powerless to shape the future is not special to Muslim societies. It is not related to their being Muslim but to the material conditions in which they are Muslim.

The end-goal is hardly a matter of dispute among the vast majority of Muslims. It is to re-establish connections between Islamic upbringing and education and modern secular, technical education.

The latter provides the means for individuals to make their way in the world, to have things to do in it and to enjoy doing them successfully. The former provides them with their religious orientation and identity.

Religious orientation is not itself the goal. The aim is not to have people identify as Muslims; the vast majority already do that. Rather, the aim is to enable them to prosper in the world in ways that express and test, inform and improve, their identity as Muslims.

As the Chinese saying puts it, the journey of a thousand miles begins from where your feet are. We in the Muslim world can only set out from where we stand in reality. That reality needs to be stated bluntly.

Today, Muslim identity is not sufficiently relevant to how things are done in the world, especially in the collective spheres of life.

Muslim identity is not the engine of prosperity, of either the production or the distribution of wealth. Muslim identity is not the engine of knowledge, of collecting it, or adding to it, or disseminating it. (This is true, rather unexpectedly, even of knowledge about the past legacy of Islam.)

Muslim identity is not the engine of political and legal order. Or rather, it is not so in a positive way. Instead, we see mainly negative expressions of it. We see it in a despairing withdrawal from the evils of power: in the attitude that the status quo, however bad, is still better than chaos.

We see it also in despairing violence intended to erase the status quo, without any labour of understanding and analysis about what will follow.

The end-goal is to make being Muslim relevant and effective in the quest for knowledge, in the quest for prosperity and in the quest for political order. Except in the sphere of personal courtesies and private concerns, being Muslim is no longer the currency of exchange neither among Muslims themselves, nor between them and non-Muslims.

To make it so again is a task of huge scale and complexity. Our first priority must be to establish institutions and forums so that the present challenges are properly identified, and then try to guide expectations towards realistic, achievable goals.

The hurdles in the way are real and substantial.First, there is the hurdle, as I said, of determining what is do-able and specifying it intelligently, in the light of local realities; in the way that sustains momentum towards the next objective; and without losing sight of the end-goal.

Second, there is the hurdle of co-ordinating effort with other societies and states. Priorities can vary sharply with local conditions. Therefore, there will be a need for trust among policymakers, with tolerance for variable levels of competence and energy.

Thirdly, there is the hurdle of rejection by those who oppose any attempt to bring religious concerns into the public sphere. The response will sometimes be concession, compromise and conciliation. At other times, it will take the form of steadfastly holding one’s ground. In either case, alert flexibility — the readiness to adjust to different circumstances — is essential.

Among general objectives, the most inclusive is to build up the commercial, financial, trade and cultural ties between Muslim societies.One measure of the need is the low values and volumes of bilateral trade between Muslim-majority countries, compared with their trade with non-Muslim countries.

Another measure is the low values and volumes of trade outside the dollar-dominated banking system.

Another is the low numbers of Muslims travelling for higher education from one Muslim country to another; the general preference, for those who can afford it, remains Europe or America.

Yet another measure is the massive inflow of cultural product from the non-Muslim into the Muslim world — the information and imagery people get from their televisions and computers; the advertising that influences the things they want to own; the time they give to sports and other entertainments.

All of this shapes people’s horizons, and their understanding of what is important and what is possible.

For the states that make up the Islamic world, the need to work together is clear. Modern technologies make it much easier to do that than it used to be. The sacrifices needed for cooperation to succeed are widely understood. But we should also highlight the benefits of a strengthened economic base in Muslim states, through increase in trade and long-term investments in human development.

The distribution of resources favours Muslim nations, but they lack the will and confidence to manage them to best advantage. If only because they are Muslim nations, their leaders have a special responsibility to nurture that will and confidence.

Their aspirations and policies should be consciously linked to the history, culture and faith that Muslims share. If enough far-sighted individuals have the courage of their Islamic convictions, what seems desirable but unrealistic can become a realistic and achievable goal.

Muslims are commanded to “bid to the good and forbid from the evil” (amr bi-l-ma`ruf wa-nahy `ani l-munkar). This entails commitment to the direction and quality of the whole social ethos. Not just traditional forms of family life and neighbourliness but also religiously valid ways of earning a living, co-operatively with others and with the natural environment.

As I mentioned, in the past, Muslims traded globally. The expansion of Islam’s influence followed the trade routes out of its Arabian heartland. For Muslims, economic effort is an integral part of responsible living.

We have a reliable record of how the Prophet and his companions went about discharging that responsibility. Muslims may not engage in practices that deliberately and systematically deprive others of their livelihood, and then, in response to a separate impulse, give charitably to relieve the distress their economic practice has generated.

Rather, the effort to do good works and the effort to create wealth must be sustained as a single endeavour. Both means and ends must be halal.

More Muslims need to join, with each other and with non-Muslims, in the urgent need to balance the creation and distribution of wealth so that a good life is available to all, including future generations.

Muslims’ efforts to develop techniques of financing and investment that are free of usury and uncertainty (speculation) are pertinent to the wider concerns about ethical investment, fair and genuinely free trade, and abolishing the export, through debt-slavery, of poverty, instability and pollution to the poorest and weakest on this earth.

We have seen over the last forty years massive growth in the stocks of Islamic financial capital. But these stocks are not being deployed to develop the economic capacity of Muslim countries. It seems that the wealthiest Muslims, individually or as sovereign powers, prefer the safe, quick returns from investment in the non-Muslim world.

In many Muslim states, economic infrastructure and activity remain linked to servicing the economies of former colonial powers. Those linkages are not sustained only by fear, but by individual and institutional inertia — by lack of will and imagination on the part of officials to take the necessary steps to put in place the needed skills and systems.

One reason that Muslims do not invest their wealth and talents in Muslim countries is that those countries are unstable, unsafe and unproductive to work in.

This vicious circle is not a function of those countries being Muslim: similar socio-economic conditions elsewhere have similar effects — an exodus of energy, talent and money.

Many Muslim states inherited their political boundaries from the colonial era. Those boundaries increased dependence on the colonial power to keep order. The anti-colonial struggle provided a shared history for communities separated by ethnic and religious differences. In the post-colonial era they have not been able to find common ground. Solidarity is not a precondition, but an outcome, of the effort to identify common purposes. It is something that has to be, and can be, constructed.

To make Muslim identity effective in the world, a major policy commitment must be to make justice and fairness the decisive value for all modes and levels of governance.

This means allowing independent centres of authority to emerge and recognising their concerns and aspirations. It means a redistribution of opportunities to acquire wealth and influence, so that decision-making is not concentrated in the same few hands.

This must be a process, not a gesture. It must be given the time it needs, according to local conditions, to happen gradually.

In this way all parties learn to trust and work with each other to mutual benefit. If government is seen to be in the service of the people as a whole, its security is guaranteed by them.

Tomorrow: Part II

Dr Farhan Ahmad Nizami presenting the Perdana Putrajaya Lecture at the Putrajaya International Convention Centre yesterday. Bernama pic

Ah Jib Gor: You are just another Abdullah Badawi

December 3, 2013

Ah Jib Gor: Just Resign

Bakri Musaby Dr. M.Bakri Musa
Morgan-Hill, California

Habis lah ‘Jib! (You are finished, Najib!) You are just another Pak Lah! Malaysia cannot afford two consecutive incompetent leaders as it enters the 21st Century. The precious and critical first decade is already lost.

Najib’s latest “Pak Lah moment” came when his Police Chief, Khalid Abu Bakar, threatened to arrest Mariam Mokhtar for sedition over her article, “One Ideology, Two Reactions,” posted on on November 29, 2013. Mariam dared to highlight the highly favorable treatment Aishah Wahab, the woman allegedly held as a slave by her Marxist master in London, received from the Najib Administration versus the visceral contempt it heaped upon Chin Peng, leader of the defunct Malayan Communist Party.

Mariam (right) suggested that the Najib Administration’s generous gestureMariam Mokhtar to Aishah was more on exploiting the favorable publicity surrounding that London slavery case.

“She had better watch out,” the Police Chief warned, “or we will go after her!” The “her” is of course Mariam.  Jantan kampung betul! (a real village bull!), as we say in the village when referring to such petty bullies.

The  Police  Chief should display his manhood where it would really count, as with confronting the Singaporeans spying on Malaysia, those intruders at Lahad Datu, or the alleged treachery with the loss of Pulau Batu Puteh. Those are the real and menacing threats to the nation’s security and stability, not the eloquent writing of a young woman!

The Arrogant IGPIGP Khalid Ashburn

Clearly Najib and his officials are threatened by Mariam’s ideas. Najib is stuck in the time warp of the old feudal ways, unable to grasp the new reality of a porous digital age. He and Khalid should be complimenting Mariam for her ability to write well, and in English, as well as her courage to express her views.

If Najib and Khalid have a better grasp of English, they would have discovered that Mariam’s earlier essay in, “Three Slaves and the Rakyat,” on the same case had more punch. In that piece she noted that while the three London women were imprisoned for three decades, Malaysians have been “metaphorically imprisoned for the most part of 56 years,” adding that the three women were shackled by “invisible handcuffs,” just like Malaysians.

“It is doubtful,” Mariam continues, “if many Malaysians realize the similarities between themselves and those three women.” Now that’s powerful stuff, but Najib and Khalid missed Mariam’s well-chosen metaphor and imagery!

Congratulations Mariam! Your voice is being heard at the highest level, and widely too as judged by the outpouring of comments both articles elicited. Keep writing! I hope the Police Chief and Najib’s other top officials would continue widening their reading repertoire beyond the UMNO newsletters, The New Straits Times and Utusan Melayu.

Mariam is not the first writer to be intimidated by the authorities. She does not need to be reminded of the horrible experiences of Kassim Ahmad, Syed Hussein, Haris Ibrahim, Hishamuddin Rais, and Raja Petra, among others.

I have nothing to offer Mariam except my best wishes, and I wish her that, and much more, as with her continued success in writing. I can, however, pass on the advice from that great Indonesian writer, the late Ananta Prameodya Toer, a man who had endured much from his government.

Orang boleh pandai setinggi langit,” Pramoedya wrote in Rumah Kaca (The Glasshouse), “tapi selama ia tidak menulis, ia akan hilang di dalam masyarakat dan dari sejarah.” (Your intellect may soar to the sky but if you do not write, you will be lost from society and history).”

Rest assured that when the collective “invisible handcuff” gets unshackled, as ultimately it will, Malaysians owe a huge debt of gratitude to brave individuals like Mariam Mokhtar.

As for that Police Chief, only his family would remember him, or if remembered by others, he would prefer not to be. Look at his many ‘illustrious’ predecessors; one jailed for punching Anwar Ibrahim, another a defendant in a multimillion-dollar lawsuit, and a third rewarded by being Chairman of a casino. That character apparently gambled right!

Najib’s Ultimate Pak Lah Moment

Najib1Najib warned the country is on the brink of bankruptcy!

Back to Najib’s other Pak Lah moments, the supposedly pious and humble Pak Lah squandered millions of taxpayers’ funds to renovate Sri Perdana before he deemed it livable. This from a man who only a decade earlier did not even own a house!

Najib however, bested Pak Lah on this front. Najib burned over two million ringgit a year just on electricity. When citizens complained, he haughtily defended his wasteful ways by suggesting that his official guests should not have to dine by candle light! He must have the whole United Nations delegates as his guests, and everyday too!

More likely Najib must have really turned down the thermostat and then had the fireplace roaring to simulate the English ambience of his student days so he could cuddle up to Rosmah.

Najib should remember the advice he received from his Prime Minister father, Tun Abdul Razak when he (Najib) and his brothers were clamoring for a swimming pool at the old Sri Perdana. “What will people say,” Najib quoted his old man as saying in turning down their request.

Malaysia's Executive JetMalaysia’s Executive Jet

Then there is the ultra-luxury, custom-fitted Airbus jet. Even Queen Elizabeth and Prime Minister Cameron do not have one. Pak Lah was severely criticized for his excessive use of that expensive toy. At least his wife (the first or second) did not get to use it in her personal capacity.

Today we have Mrs. Najib (the second)–Rosmah– jaunting off in it, oblivious of the cost to taxpayers. I do not know which is more reprehensible; Najib requesting the approval from his cabinet for his wife’s use of the jet or the cabinet approving it. This at a time when he warned the country is on the brink of bankruptcy!

najib-and-badawiAbdullah Badawi burdened Malaysia for over five years; the nation is still paying for his many follies and general incompetence. Many claim that Najib is worse than Pak Lah; that is being petty. When you score is already a miserable F, it does not really matter whether it is also F-minus.

Expect at this week’s UMNO General Assembly for Najib to execute yet another Pak Lah moment – reading his “own” pompous self-congratulatory pantun (poem). Do not expect however, for the delegates to even mention let alone review this critical issue of his glaring incompetence and profligate ways.

Thus it behooves Malaysians to ensure that this burden of Najib’s inept leadership comes to an end soon. Malaysians must force Najib to perform his ultimate Pak Lah moment – resign!


Three Slaves and the Rakyat by MM:

Prime Minister Najib Razak meets Christiane Amanpour

November 4, 2013

Prime Minister Najib Razak meets Christiane Amanpour

Watch this video and tell me what you think. I believe he did better than his predecessor, Tun Abdullah Ahmad Badawi. But  that does not say much, does it? –Din Merican

Tony Pua says to Najib stop embarrassing Malaysia

by Alyaa Azhar@

Prime Minister Najib Tun Razak was hypocritical when answering questions during the CNN interview hosted by Christiane Amanpour, says DAP’s Tony Pua.

Prime Minister Najib Tun Razak has been urged to “stop embarrassingNajib Razak Malaysians” with the global moderate statesman facade as his actions are to the contrary.

Petaling Jaya Utara MP Tony Pua was commenting on Najib’s 12-minute interview with Christiane Amanpour on CNN last week.

“At the interview, the Prime Minister’s facial expression tells the world how uncomfortable he was in answering the questions thrown at him which exposes the facade of a global moderate statesman,” said Pua.

The DAP national publicity secretary also pointed out how the Prime Minister sang a different tune when Amanpour directed the spotlight to Malaysia’s increasing religious conservatism and extremism.

Najib had said that his priority was to ensure peace and harmony in Malaysia.

“What the Prime Minister is telling the world is that while it is hunky-dory to make the glamorous pitch for moderation at international platforms, moderation takes a back seat to peace and harmony domestically,” Pua said.

tony-pua2Pua elaborated that the peace and harmony mentioned by Najib was merely euphemism for pandering to the religious far-right and restricting the rights of the minority.

“As an example, the Prime Minister told Reuters that the curb against Catholic weekly, The Herald, from using the word Allah was necessary to protect public security and national harmony, going as far as to describe The Herald as a publication with wide circulation,” he said.

However, Pua stressed that the wide circulation was a distribution of only 14,000 issues in churches in a country of 30 million people.

“Instead of justifying his peace and harmony priority, his defense only proved the persecution of minorities in Malaysia,” added Pua.

He then opined that Najib does not have any right to be a statesman for moderation at international forums if he cannot practise what he preaches.

“His pretentious call for the Global Movement of Moderates only leads to being easily exposed as a hypocrite at the global arena and become an embarrassment to the country,” Pua stressed.

The Allah Issue will not just go away,so get real

October 15, 2013

The Allah Issue will not just go away,so get real

by Zaid Ibrahim

COMMENT: The Court of Appeal (CoA), as expected, has reversed thezaid Kuala Lumpur High Court decision on the use of ‘Allah’ by Catholic weekly The Herald.

The CoA, however, took a long time to hear and decide on the appeal, and this has enabled the general election to be safely tucked away without anyone having to worry about any adverse effect the decision might have had, had it been delivered earlier.

Before my fellow-Muslims think that the decision is a great victory for them, I must urge them to think properly. The decision may be a big victory for some Muslim NGOs or Nasharuddin Mat Isa, Ibrahim Ali  and Hassan Ali, but for the rest of the Ummah it will matter very little.

The decision binds only The Herald. How many Muslims read it? How many are threatened by anything besides their own insecurities? Besides, someone can always produce another publication with a new name and the controversy will start all over again.

Loud Mouth Zahid HamidiThe Home Minister will issue yet another directive that the new publication is ‘against public order’ and lawyers will be busy, as will Ibrahim Ali and his gang. Yet another public quarrel will ensue, and this will go on and on.

The CoA decision is limited to The Herald alone. This does not, and should not, mean that Christians are prohibited from using ‘Allah’ in their prayers, or that they are prohibited at all in Sabah and Sarawak.

Christians beyond The Herald (and Catholics too), can still use that Name whenever they want to, and in any celebration they have. Of course, some Muslim NGOs will counter this new situation and go to court yet again to stop all Christians, regardless of denomination, from using ‘Allah’ on any occasion, religious or otherwise.

They will probably seek to widen the scope of the original government order to include prohibiting Christians and other non-Muslims from using ‘Allah’ at all under any circumstance. What about Sikhs? Sikhs can’t be bound by an order limited to a single Catholic newspaper.

The CoA has also ventured into new territory, although I shall let my colleagues who are more learned in this part of the law dissect the judgement.

All I can gather from the CoA decision is this: Islam has primacy over other faiths and, if Muslims are upset about some part of the practice of non-Muslims – and the Minister issues an order to stop non-Muslims from that practice – then the order is considered ‘valid’.  The CoA has also made it clear that it will never disagree with the Minister’s order.

How will this be enforced?

Religious people fear God more than the courts, whether they are Muslims or not. This judgment means nothing to the God-fearing Christians.

The court can declare whatever it wants and some Christians (and those of other faiths, and perhaps Muslims too) will do whatever religion requires of them, regardless of the cost to themselves or others.

Religion has that effect on some people. It can drive emotion beyond reason. But many regular Christians believe that ‘Allah’ is the right Name for God. They will continue to use that Name and the Courts will not be able to do anything about it. How can anyone initiate contempt proceedings against so many people?

The courts will then look stupid – how do will they enforce such orders? This is the scenario I foresee happening in the coming years of this so-called 1Malaysia. Silly things will continue.

Likewise, Muslims will fight this ‘battle’ for years to come, and they will be so preoccupied by this war over God’s Name against Christians and other infidels that no one will have little time left for education, their families and their  general economic improvement.

This is why I sometimes think that this is all part of the Jewish-Freemason-Communist-Illuminati-American-Martian (insert favourite bugbear here) conspiracy—to sidetrack the Muslims, Christians, and everyone else from focusing on what truly matters in life.

We are made to think that we need to continue to fight great battles and to seek great victories. Maybe we want to think it.

Get real.

ZAID IBRAHIM, a lawyer by training, was involved in politics for a time. This article is reproduced from his blog ‘The Zaidgeist’.


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