Singapore enters a new era of politics


October 27, 2011

http://www.thestar.com.my

Singapore enters a new era of politics

INSIGHT: DOWN SOUTH By Seah  Chiang Nee(10-22-11)

The departure from the Cabinet of the man who has had a hand in almost everything in Singapore for 46 years seems to have jolted people and politics into action.SINGAPORE’S Parliament is meeting for the first time with Lee Kuan Yew no longer in the Cabinet and the mood reflects the historic occasion. It points to a post-Kuan Yew era that ended recently with the former prime minister’s retirement from both the Cabinet and the People’s Action Party (PAP) leadership.

His son, Prime Minister Lee Hsien Loong, is now de facto his own man.Psychologically, the departure of the man who has had a hand in almost everything in Singapore for 46 years seems to have jolted people and politics into action.

Although 88-year-old Kuan Yew remains a Member of Parliament, the man who helped to transform this city into one of the wealthiest in the world, is unlikely to play any more major role in future.

Whether by design or coincidence, Kuan Yew left Singapore for visits to Turkey and the United States a day before Parliament began its meeting.

The impact of his absence has been marked. I am happy to note there was none of the bitterness or name-calling that some of my friends had warned me to expect from this session. Instead, there was a new level of freshness and a higher degree of intelligence.

Several ruling PAP members spoke with candour seldom heard before, touching on some sensitive subjects rarely done in the past without a slap-down from Kuan Yew. A few called for changes in the country’s elected presidency system and its complex Parliament representatives such as non-constituency or nominated MPs in the wake of the new political environment.

One wanted the quota for foreign workers changed. However, others, true to past forms, stuck closely to party positions and denying anything is really wrong.

It is apparent that Hsien Loong has signalled to his MPs of his readiness to have more open discussions. The PAP representatives also took the cue from Hsien Loong when he himself had publicly apologised for government mistakes in the past five years, especially in public housing, transport and healthcare.

In spite of his unprecedented apology, his party lost an unprecedented six seats out of the 87 at stake and its popular votes fell to an all-time low of 60%.

The biggest difference is the largest number of opposition MPs in modern record and their quality showed. As a result, public interest in the proceedings has gone up for the first time in years.

At the height of Kuan Yew’s strongman rule, many Singaporeans had paid scant attention to Singapore’s Parliament, regarding it merely as performing a rubber-stamp role.

Instead, interest was focused on the Cabinet and Lee in particular as the sole power of change.With few exceptions, backbenchers were reluctant to counter or challenge the leadership or to present alternative arguments.

The Cabinet made the decision and Parliament’s duty was to approve it, often without real debate. That was the practice that Kuan Yew felt was an effective way of building prosperity. Too much democracy and contesting arguments, he felt, were bad for economic growth.

Although as a session to discuss the President’s speech, such a meeting has traditionally produced little more than general statements of intent.

“It is usually time for MPs to get some limelight by talking a lot without saying anything meaningful beyond making general promises,” said a reporter covering it. “This time things may be a little different.”

He said many PAP MPs knew that if they didn’t perform well in the public eye, they would be voted out in the next election.

Already public pressures have produced a commitment to build more subsidised flats, more hawker centres to reduce food costs and a cut-down in the car population over three years.

“With better education, the voters are better able to distinguish between general pledges and concrete plans made by politicians,” said one blogger.

The major commitments include the following:

  •  Construction of 50,000 more public flats in 2011-12, and two more new townships will eventually be built. If needed, HUB could build up to 100,000 within the next five years;
  • Foreign ownership of private property will be tightened to about half the present number; and
  • Ten hawker centres will be built over the next 10 years to meet increasing demand.

While Parliament was meeting, the person in charge of transport was watching trains. He had a compelling reason to do so; for days, public complaints had been piling up on his desk about frequent breakdowns and jam-packed stations during peak hours. Since he took over as Transport Minister, Liu Tuck Yew had been travelling on trains and buses to see how the over-crowdedness can be resolved.

In Singapore, political history is being made in many small steps rather than one big leap. Last week, as Parliament was meeting, some Singaporeans tried without success to organise a Wall Street-type protest in Singapore’s business district against the excesses of capitalism.

About 20 people showed up, an apparent failure. However, one analyst said the Singapore success story was not totally free of the Wall Street feature, which meant more attempts could be expected.

Here, too, we have had incessant rental increases that produced no innovation or opportunity for others, except the landlord. “We must not allow capitalism to continue strengthen the powers and wealth or a small group to exploit the population and encourage an ever-widening income gap,” one surfer said.

“I just hope that we do not go down the same slope as Wall Street by adopting policies that are inclusive and caring for Singaporeans who have fallen through the cracks,” he added.

Mat Zain: Najib knew of A-G’s alleged wrongdoings


October 27, 2011

Mat Zain claims Najib knew of A-G’s alleged wrongdoings

By Shannon Teoh

 Datuk Seri Najib Razak said that then IGP Tan Sri Abdul Gani Patail should not have been involved in falsifying evidence in Datuk Seri Anwar Ibrahim’s 1998 “black eye” probe, a former senior policeman said today of his private meeting in October 2008 with the prime minister.

Datuk Mat Zain Ibrahim, who has led a one-man campaign to remove the Attorney-General (AG), said he had met Najib, who was then the Deputy Prime Minister, to discuss his allegations against Abdul Gani  and the then Inspector-General of Police Tan Sri Musa Hassan.

“Even though Gani’s intention might been to help the IGP (Tan Sri Rahim Noor-right), falsifying evidence is still wrong which he should not have done,” Mat Zain quoted Najib as telling him.

The former city criminal investigation chief also quoted Najib as saying “I got to know that (former IGP Tan Sri) Musa (Hassan)’s role was not as bad as Gani’s and I think he can get away with it.”

Excerpts from the conversation between Mat Zain and Najib are contained in a letter to the Prime Minister which the former policeman made available to the media today.

Mat Zain was the man responsible for investigations into former IGP Tan Sri Rahim Noor’s role in the assault of Anwar while he was in custody in 1998.

Rahim eventually confessed to assaulting Anwar, resulting in a black eye that Anwar sported during his court appearances then to face charges of sodomy and abuse of power.

Mat Zain has claimed that Abdul Gani, who had led the sodomy and corruption prosecutions against Anwar, and Musa fabricated evidence in the black-eye case.

In his latest letter to the PM, Mat Zain also accused the administration of “doing everything possible to avoid criminal charges” against Abdul Gani as the government would also be guilty of abusing its power in the last two decades.

“YAB Datuk Seri and the government will do everything possible to avoid any criminal charges against Gani. The government is worried that should Gani be proven to have abused his powers … then simultaneously the government would be guilty of having done the same thing since 1990,” he wrote.

In the letter, Mat Zain accused Abdul Gani of “screening criminal wrongdoings, abuse of power and corrupt practices, linked to VVIPs, prominent corporate figures and senior government officials, involving property and cash to the tune of several hundred of millions of ringgit … traceable to the early 90s.”

Putrajaya said earlier this month it will not take action against the A-G despite renewed allegations of corruption and the fabrication of evidence against the country’s top lawyer.

Minister in the Prime Minister’s Department Datuk Seri Mohamed Nazri Aziz said that last year’s decision to close the door on the A-G’s alleged involvement in Anwar’s black-eye case still stands.

Mat Zain has repeatedly attacked Abdul Gani in recent months, calling on Najib to sack the A-G for failing to initiate charges in high-profile cases such as the death of DAP aide Teoh Beng Hock while being held overnight for questioning by the Malaysian Anti-Corruption Commission.

He has also pressed the PM to form a royal commission of inquiry or tribunal to investigate Abdul Gani’s role in destroying public confidence in the Police.

http://www.themalaysianinsider.com/malaysia/article/mat-zain-claims-najib-knew-of-ags-alleged-wrongdoings/

Malaysiakini Reports: (October 27, 2011)

A former senior police officer alleges that the Najib Abdul Razak administration is not willing to take action to form a tribunal against attorney-general Abdul Gani Patail for his alleged wrong-doings, following fears that it (the government) could also be similarly implicated in such crimes.

Mat Zain Ibrahim, in his open letter sent to Najib last week and made available to Malaysiakini today, claims that he briefed Najib in 2008 when he was still the Deputy Premier about Gani’s alleged misconduct.

NONEIn the open letter titled ‘Rule of Law government breaks its promises’, Mat Zain stated there is a public perception that Najib refuses to take action against Gani (right) because the premier feared the AG may expose some so-called secrets with regard to Altantuya Sharibuu or the Scorpene submarines purchase.

“I am of the opinion that YAB Datuk Seri and the government will do everything possible to avoid any criminal charges being preferred against Gani. The government is worried that should Gani be proven to have abused his powers for cheating or falsification/corruption, then simultaneously the government would then be guilty of having done the same thing since 1990.”

Mat Zain revealed that his investigations found three letters of undertaking dated April and May 1990 signed by three well-known entrepreneurs (Abdul Halim Saad, Wan Azmi Hamzah and Tajudin Ramli) which confirmed they held several hundred million ringgit of assets for Daim Zainuddin.

Daim was finance minister from 1984 to 1991, and again from 1999 to 2001. Mat Zain noted that he had investigated the allegations that the three entrepreneurs had held the assets in trust for Daim when an official complaint was made in 1999 by Anwar Ibrahim.

In the three letters concerned:

  • Abdul Halim confirmed he held 52,208,500 Faber Merlin (M) Bhd shares and 130,000,000 Renong Berhad shares for and on behalf of Daim based on a letter dated April 30, 1990.
  • Wan Azmi also confirmed he held RM150 million in cash in trust on behalf of Daim.
  • Tajudin, in his letter dated May 24, 1990, confirmed he held RM70 million cash in trust on behalf of Daim.
‘Letters are material evidence’

Those three letters, Mat Zain said, are material evidence to implicate the entire cabinet at that point of time.

“Most people still remember when even a little letter from the Johor state secretary’s office in 1953 could cause not only the loss of Pulau Batu Putih to Singapore, but most importantly resulted in “loss of face”, our dignity and the sovereignty of our country.

“If such a brief letter from the Johor office can be accepted as material evidence by the International Court of Justice, then, I believe, the 1990 letters and the three fabricated expert reports prepared on Gani’s instructions could overcome any attempts to twist the facts.

“Personally, I am of the view that the documents are enough to destroy the credibility of the government since the 1990s. They can be used as proof that the abuse of powers,  corruption, cheating and falsifications that have occurred all this while, were never done for the sake of the country, nor the rulers nor for any particular race or religion,” he said.

Mat Zain claims that Gani knew of the three letters as he had personally dealt with him (Gani) and extended all the documents pertaining to this case to the then-Anti-Corruption Agency in July and August 1999.

“Perhaps YAB Datuk Seri is fully aware of the facts from the very outset, being a full minister and a member of the cabinet since 1986. Even though YAB may not be in a position to order a full-scale investigation on Daim  at the very least YAB should assume the responsibility to clarify the dubious relationship between Gani and Tajudin in the context of the investigation into the Malaysia Airlines scandal,” he said.

At the very least, Mat Zain said, Najib as the Finance Minister should explain to the people whether the RM 70 million held by Tajuddin on Daim’s behalf had been returned to its original owners or otherwise.

That is why, Mat Zain said, he would be not be surprised if Gani had a role to play in the much talked about multi-million suit settlement between several government linked corporations and Tajudin.

He also said that the recent allegation that Gani performed the haj trip together with Tajudin’s proxy, Shahidan Shafie, and followed by another that he received gratifications from Ho Hup Berhad, are not therefore unusual or surprising.

http://www.malaysiakini.com/news/179777 

Sex, Lies and Malaysian Politics


October 27, 2011

Sex, Lies and Malaysian Politics

by John Berthelsen (10-25-11)

Prurient and puritanical, Malaysia gags, goes gaga for naughty tales

Malaysia fancies itself a conservative society, with plenty of restrictions on racy movies and activities that might lead its majority Muslim population astray. But get inside a courtroom and anything goes, with details that would make a New Yorker blush, published in the mainstream media.

In the latest trial of opposition leader Anwar Ibrahim, whose sex life has been an object of prosecutorial attention off and on since 1998, the court — and the press — has been filled with graphic descriptions of the anatomy of Mohamad Saiful Bukhairy Aslan, the 26-year-old former aide who has accused Anwar of sodomy. Outside of court, the titillations are also commonplace — especially when an opposition politician or his family is involved.

Take the 16-year-old son of Lim Guan Eng, the Chief Minister of the opposition-held Penang state. The youth was the subject of bloggers accusing him of fondling a girl and getting kicked out of his school, with his father supposedly having to pay bribes to hush up the matter. Unfortunately, it transpired that the girl whose photo was distributed as the victim was a 21-year-old Hong Kong chess champion(right) who is now attending Wellesley University in the United States, has not been in Malaysia for seven years and has never met Lim’s son. She demanded an apology for herself and the youth.

“This is something fairly new. Every month there is something, half of it manufactured, if not most,” said Elizabeth Wong, an opposition Parti Keadilan Rakyat state assemblywoman who was the victim of a former boyfriend who posted nude pictures of her on the Internet and who considered quitting politics out of embarrassment. “It isn’t the way to get people in politics. It just continues, I imagine people are disgusted with politicians regardless of party.”

Although the United States set a precedent with the mother of all sex scandals – the 1998 impeachment trial of President Bill Clinton for having sex with a White House intern, there are few examples of similar attention to sexual misdoings across Asia.

“I’ve got no clue why Malaysian politicians are all sex deviants of one kind or another,” said a longtime expatriate resident. “I am also not so sure that this isn’t going on lots of other places nowadays, given the various sex scandals that have emerged in recent times (think Berlusconi, Dominique Strauss-Kahn, Elliott Spitzer, Arnie the sperminator, gay Brit ministers, etc.).”

However, he says, the Anwar cases “have been overtly used in a political power struggle here, with all the attendant publicity afforded by a government-controlled mainstream media determined to ensure that the gruesome details reach every Malaysian man, woman, child, dog and kuching (cat).”

Going back to at least the middle 1980s, otherwise tame newspapers have often been filled with graphic sexual details. At one point the daily tabloid Malay Mail got its hands on the illicit pictures of a romp between an ethnic Indian politician and a beauty queen. The newspaper couldn’t run the pictures themselves, but it got its artists to produce amazingly realistic pictures of the beauty queen’s various lecherous poses – then showed her the photographs and photographed her humiliated reaction at seeing them.

All of this is despite the fact that the so-called khalwat cops – conservative Muslim patrolmen – patrol assiduously to ensure there is no “excessive closeness” between people of opposite sexes, busting the odd luckless teenage couple caught smooching. But in the houses of power the powerful have been going at it like goats nonstop for years, and not just with the four wives they are allowed under Islamic law. In 2002, the Reformasi website named top public figures and officials who were having relatively public affairs, including Najib Tun Razak, then the Defense Minister and now the Prime Minister, who was caught in a Port Dickson hotel room with the actress and singer Ziana Zain. None have been apprehended by the khalwat police.

“It’s in the culture — not that sex is a scandal in itself but that Malays like to aib or cause shame to their enemies,” said an ethnic Malay lawyer in Malaysia. “Khalwat is a tool to eliminate or shame your enemy. It’s partly rooted in perasaan hasad dengki – good old jealousy to bring down the other fella who has more than you. Islam itself forbids spying. That’s what khalwat is. They are obsessed with khalwat. I think it’s bullshit. Utter nonsense. That’s all they do.”

Others blame it on former Prime Minister Mahathir Mohamad (left).“What is going on now is an extreme kind of politics that is very debased by people who have no sense of values,” said S. Nagaratnam, acting dean and senior lecturer of Liberal Studies at Wawasan University in Penang.

Nagaratnam cites the United Malays National Organization (UMNO), Malaysia’s dominant political party. “The UMNO we have now is not the one we had in the 1960s and 1970s, when we had leaders who were legally trained and had respect for the rule of law. Thanks to Dr Mahathir, there was an erosion in basic values, a corruption of those kinds of boundaries.”

Whatever happened, Malaysians have been subjected to a plethora of sex tapes and other transmissions that have gone viral on the internet. Anwar has featured in three of these public airings, the first in 1999 when he was put on trial for sodomy and corruption in a trial that featured equally graphic revelations. That trial has been universally condemned as rigged to get him out of politics. The second trial, which is just winding up, has featured similar descriptions of sexual activity and similar charges of rigged prosecution.

The third episode came earlier this year when three men known collectively as “Datuk T” — a datuk is the lowest rank in Malaysia’s whimsical list of titles for the privileged — planted four cameras in a love hotel to engineer the filming of either Anwar or his stunt double, having sex with a Chinese prostitute. Anwar has insisted the figure in the film wasn’t him and regularly has flashed glimpses of his stomach, which he says is in contrast to the pot belly on the man having sex. Anwar’s doctors say a back injury has prevented such athletic goings-on. Whoever it was, the film clip has been circulating widely on the Internet and has been distributed across the country on DVDs.

Ironically, one of the three datuks behind the filming was Abdul Rahim Tamby Chik, the former Malacca Chief Minister, who was forced to resign his position after allegedly having an affair with a 15-year-old schoolgirl.

After the matter became public, the schoolgirl was sentenced to three years protective custody in a house for “wayward girls.” After the girl’s grandmother came to him for help, the opposition parliamentarian Lim Guan Eng brought up the matter in parliament. He was subsequently sentenced to three years in prison for sedition for printing a pamphlet containing the allegations.

The love hotel technique was also used to dethrone Chua Soi Lek, one of Malaysia’s top ethnic Chinese politicians, who was forced to resign as minister of health and to leave politics after a sexually explicit videotape was widely circulated that showed him getting into bed with an unnamed woman whom he later described as a friend.

Political enemies believed to be rivals for power in the Malaysian Chinese Association were thought to be behind the filming, which included four secret cameras in a hotel room. Chua, however, recovered from the scandal and has since assumed the presidency of the MCA.

Likewise, almost immediately after Mohamad Sabu was elected deputy president of Parti Islam se-Malaysia in June with a mandate to broaden the party’s appeal to Malaysia’s ethnic Malays, a VCD and flyer titled “Skandal Seks Mat Sabu” (Mat Sabu sex scandal) was mailed across the country. PAS leaders charged UMNO officials with being behind the distribution of the film.

http://www.asiasentinel.com/index.php?option=com_content&task=view&id=3884&Itemid=178

The Bankers’ Capital War


October 27, 2011

The Bankers’ Capital War

by Howard Davies (10-19-11)

Almost everyone nowadays agrees that banks need more capital. Christine Lagarde chose to make it her first campaign as Managing Director of the International Monetary Fund. And conventional analyses of the financial crisis focus on the weak capital base of many banks, which left them with insufficient reserves to absorb the losses they incurred when asset prices fell sharply in 2007-2008.

Taxpayers, notably in the United States and the United Kingdom, were obliged to step in to fill that hole. The same disaster movie is now playing in the eurozone. We can only hope that the bankers are eventually rescued from the burning eurotower by Super-Sarkozy and Wonder-Frau Merkel – and that the Basel Committee of Banking Supervisors ensures that there will be no sequel.

The Basel Committee has proposed strengthening considerably both the quantity and the quality of capital in the global banking system. This would mean much larger core equity capital for all banks and a range of additional reserves – a capital conservation buffer, a counter cyclical buffer, and a surcharge for systemically vital institutions – to be added by local regulators as they see fit. Unfortunately, the final implementation date for these new obligations has been deferred until 2019 – by which point a few banks might still be left standing.

In fact, the view that banks need more capital, while widespread, is not unanimous. Two notable holdouts are Jamie Dimon and Walter Bagehot. Dimon, the Chairman and CEO of J.P. Morgan, has been making his contrarian views known to regulators, most recently almost coming to blows, according to eyewitnesses, in a spat with Governor of the Bank of Canada Mark Carney, who chairs a group that is designing parts of the new regime.

Walter Bagehot (right) is in no position to threaten Carney, or any other regulator. He died in 1877. But in his great work on finance, Lombard Street, published in 1873, he asserted that, “A well-run bank needs no capital. No amount of capital will rescue a badly run bank.” I expect that Dimon, who has steered Morgan through the crisis without the need for public support, would say “amen.”

Of course, regulators cannot easily require all banks to be “well-run” in Bagehot’s sense. So banks require capital as a backstop. It is not a bad substitute for perfect judgment, and at least it can be defined and measured. But how much capital is enough?

Even if, at heart, they take the Bagehot view, all bankers recognize that market confidence requires them to demonstrate a more solid capital base to attract wholesale funding, as well as to satisfy the stricter demands of regulators. But a wide gap has opened up between the financial authorities and the banks on the costs and benefits of the much higher requirements now demanded by Basel.

Basel 3, the Basel Committee’s new global regulatory standard on banks’ capital adequacy and liquidity, will more or less double the equity requirements, and will impose extra costs on banks deemed “too big to fail.” The Committee’s analysis of the economic consequences found that the impact on growth would be modest, perhaps reducing GDP by 0.33% after five years – easily within the margin of forecast error. The OECD took a different view, putting the growth impact at about twice that level, and rather higher in Europe, where companies rely far more on bank financing than they do in the US.

In sharp contrast, the Institute of International Finance, the leading trade association for the world’s top banks, believes that the impact of higher capital requirements could be far stronger. The IIF believes that GDP could be fully 5% lower after five years, with unemployment more than 7% higher.

The IIF’s forecast may seem alarmist, but the competing estimates are based on some intriguing analytical differences. Regulators take the view that the impact of higher capital requirements on the cost of credit to borrowers will be modest, as the overall cost of funds to banks will not rise much. They rest their case on the famous Modigliani-Miller theorem, which implies that a company cannot alter its capital cost by changing the balance between equity and debt on its balance sheet. If there is more equity, then logically debt should be cheaper, as the company (or bank) is better insulated from default.

Bankers accept that, in the long run, the theorem might hold, but argue that it will take time, especially given recent events, to persuade investors that banks are genuinely safer, and that their shares should be thought of as closer to utility stocks, yielding a lower return. Indeed, Franco Modigliani also argued that investors have a “preferred habitat,” and that coaxing them out of it carries some cost. That does not bode well for banks, which have been a very poor investment in the last few years. Moreover, the banks assume that they will need to hold more capital than regulators ostensibly require in order to maintain a margin of safety.

These assessments are unusually divergent. Though economists are notoriously disputatious, their estimates do not often differ by a factor of ten. It would be wise, before the rules are set in stone, to refer the issue to the World Institute for the Resolution of Economic Disputes in Baltimore, or “The Wire.”

Unfortunately, there is no such institute, in Baltimore or anywhere else. There is no one who can offer a timely and, above all, authoritative view on which forecast is the more compelling scenario. The stakes of not knowing are very high.

Sir Howard Davies, a former chairman of Britain’s Financial Services Authority, Deputy Governor of the Bank of England, and Director of the London School of Economics, is a professor at Sciences Po in Paris.

Copyright: Project Syndicate, 2011.
http://www.project-syndicate.org

Samy’s Con-Job on Diwali Day


October 26, 2011

http://www.malaysia-chronicle.com

MIC’s Samy Velu, Gone but Back with RM10 billion Con-Job on Malaysians and RM 9 billion Loan to Bangladesh

by  Ismail Dahlan, Malaysia Chronicle

Having achieved absolutely nothing in his capacity as ‘Envoy to South Asia’, Samy Velu now decides to pull off what is essentially a confidence trick on Malaysians. First he announces RM 10 billion in ‘deals’ for Malaysian companies from Bangladesh. Then he announces that Malaysia will be lending RM9 billion to Bangladesh for the Padma Bridge that the World Bank has refused to finance because of corruption allegations.

The projects that Malaysian companies are supposed to get are MOUs. MOUs are not worth the paper they are written on because they are not legal documents. Malaysian politicians are fond of signing pretend MOUs that never materialize into real contracts.

This is for the purpose of creating headlines that will make you think they are doing a good job. Najib is also fond of this neat little trick. He is always signing MOUs when he travels. You never hear about the MOUs after that. Because they never happen.

But the money is real

The money we will have to give Bangladesh is real and we will have to hand it over right away. In the end there will be no projects for Malaysian companies, there will probably be no bridge constructed and Malaysia will lose RM9 billion in what will inevitably be written off as a bad loan.

It’s a shell game, Samy Vellu style. But what’s another RM9 Billion when Malaysia already owes RM400 Billion. Samy doesn’t care, Najib doesn’t care, nobody in the entire BN administration appears to care.

In the first place, there is no such job as ‘Envoy to South Asia’. Malaysia does not need any such envoy. Samy Vellu was given the job by Najib so that he would quit as MIC chief. Najib didn’t know how else to get rid of him.

Samy Vellu now holds a ministerial rank with ministerial pay and ministerial perks, paid for by the Malaysian taxpayers i.e. you and me.

He regularly travels to South Asia because he has to pretend to be working. More likely, he likes the food there. His waistline certainly gets wider all the time. Again, the taxpayer foots the bill.

Even the Bangladeshis will know better than to believe Samy Vellu

Bangladesh is one of the poorest countries in the world. Bangladesh does not have RM10 Billion in projects to hand out. Samy Vellu is really scraping the barrel with this Bangladesh story. Amazingly, he seems certain of fooling everybody with this poorly concocted piece of fiction. His story is like a Tamil movie plot; predictable and full of holes. And we definitely do not want to watch Samy sing and dance.

Bangladeshis labor in Malaysia as construction workers, waiters, cleaners and all the other menial jobs that Malaysians are no longer interested in doing. They live in close and often filthy quarters. They are paid a pittance and often treated disrespectfully and badly. They still come here because there are no jobs for them in Bangladesh. Because the Bangladesh economy is a mess and because corruption is endemic.

I wonder what they will have to say about the ‘news’ that Bangladesh is handing out RM10 billion in projects to Samy Vellu. If they have any sense, they will not believe it. Neither should we.

Unconventional View: It’s Consumer Spending,Stupid


October  26, 2011

http://www.nytimes.com

Op-Ed Contributor

Unconventional View: It’s Consumer Spending, Stupid

By James Livingston
Published: October 25, 2011

AS an economic historian who has been studying American capitalism for 35 years, I’m going to let you in on the best-kept secret of the last century: private investment — that is, using business profits to increase productivity and output — doesn’t actually drive economic growth. Consumer debt and government spending do. Private investment isn’t even necessary to promote growth.

This is, to put it mildly, a controversial claim. Economists will tell you that private business investment causes growth because it pays for the new plant or equipment that creates jobs, improves labor productivity and increases workers’ incomes. As a result, you’ll hear politicians insisting that more incentives for private investors — lower taxes on corporate profits — will lead to faster and better-balanced growth.

The general public seems to agree. According to a New York Times/CBS News poll in May, a majority of Americans believe that increased corporate taxes “would discourage American companies from creating jobs.”

But history shows that this is wrong. Between 1900 and 2000, real gross domestic product per capita (the output of goods and services per person) grew more than 600 percent. Meanwhile, net business investment declined 70 percent as a share of G.D.P. What’s more, in 1900 almost all investment came from the private sector — from companies, not from government — whereas in 2000, most investment was either from government spending (out of tax revenues) or “residential investment,” which means consumer spending on housing, rather than business expenditure on plants, equipment and labor.

In other words, over the course of the last century, net business investment atrophied while G.D.P. per capita increased spectacularly. And the source of that growth? Increased consumer spending, coupled with and amplified by government outlays.

The architects of the Reagan Revolution tried to reverse these trends as a cure for the stagflation of the 1970s, but couldn’t. In fact, private or business investment kept declining in the ’80s and after. Peter G. Peterson, a former commerce secretary, complained that real growth after 1982 — after President Ronald Reagan cut corporate tax rates — coincided with “by far the weakest net investment effort in our postwar history.”

President George W. Bush’s tax cuts had similar effects between 2001 and 2007: real growth in the absence of new investment. According to the Organization for Economic Cooperation and Development, retained corporate earnings that remain uninvested are now close to 8 percent of G.D.P., a staggering sum in view of the unemployment crisis we face.

So corporate profits do not drive economic growth — they’re just restless sums of surplus capital, ready to flood speculative markets at home and abroad. In the 1920s, they inflated the stock market bubble, and then caused the Great Crash. Since the Reagan revolution, these superfluous profits have fed corporate mergers and takeovers, driven the dot-com craze, financed the “shadow banking” system of hedge funds and securitized investment vehicles, fueled monetary meltdowns in every hemisphere and inflated the housing bubble.

Why, then, do so many Americans support cutting taxes on corporate profits while insisting that thrift is the cure for what ails the rest of us, as individuals and a nation? Why have the 99 percent looked to the 1 percent for leadership when it comes to our economic future?

A big part of the problem is that we doubt the moral worth of consumer culture. Like the abstemious ant who scolds the feckless grasshopper as winter approaches, we think that saving is the right thing to do. Even as we shop with abandon, we feel that if only we could contain our unruly desires, we’d be committing ourselves to a better future. But we’re wrong.

Consumer spending is not only the key to economic recovery in the short term; it’s also necessary for balanced growth in the long term. If our goal is to repair our damaged economy, we should bank on consumer culture — and that entails a redistribution of income away from profits toward wages, enabled by tax policy and enforced by government spending. (The increased trade deficit that might result should not deter us, since a large portion of manufactured imports come from American-owned multinational corporations that operate overseas.)

We don’t need the traders and the C.E.O.’s and the analysts — the 1 percent — to collect and manage our savings. Instead, we consumers need to save less and spend more in the name of a better future. We don’t need to silence the ant, but we’d better start listening to the grasshopper.

James Livingston, a Professor of History at Rutgers, is the author of “Against Thrift: Why Consumer Culture Is Good for the Economy, the Environment and Your Soul.”

A version of this op-ed appeared in print on October 26, 2011, on page A27 of the New York edition with the headline: It’s Consumer Spending, Stupid.