Way to go, Dato' Kadar Shah!

THE CORRIDORS OF POWER

M. Bakri Musa

“Apologies – at the very least – are called for.” So began an editorial, “Feast of Lies,” that appeared in the New Straits Times on April 27, 2009. Its pontificating tone continues, “… scandalous allegations are leapt on and gnawed to the bone without even a perfunctory attempt at verification, ….”

What triggered the righteous indignation of the paper’s editorial writers was the alternative media’s widespread reporting of the shenanigans of the Kelantan royal family. Today, thanks to a brave Malaysian, Kadar Shah Sulaiman, and the professionalism of Singapore’s police personnel, the Kelantan Prince’s estranged wife, Manohara, is now free. As the world now knows, her nine-month royal marriage was anything but a fairy tale, at least according to Manohara, which is what matters.

While her husband may be a prince, she discovered too late that he was of the Neanderthal variety. Perhaps her kiss was not powerful enough; the frog still remains in him.

I would have thought that the folks at The New Straits Times, of all people, would not be strangers to royal mischief. All they have to do is review their archives of the late 1980s and early 1990s.

What prompted the sanctimonious editorial was the appearance of the young royal couple at a wedding reception in Kota Baru where they were (or at least she was) seen smiling happily. Any editor who could have been so easily hoodwinked by a “photo op,” well, he or she could also be easily swayed by a mere phone call from someone powerful. So much for being “hardnosed” journalists!

However, this commentary is not on the credibility (or the lack thereof) of The NST. I need not add anything on that matter; the paper’s declining circulation is proof enough of the current sorry state of this once proud publication.

Instead, I cannot help but wonder what would have happened had Manohara tried her escape not from a Singapore hotel but one in KL. Three points worth pondering; the first two relate to the professionalism of Singapore’s public service, in this particular case, its Police Force. The third concerns the humanity of one Malaysian who tipped Manohara’s family that the Prince and his wife would be in Singapore and thus was instrumental in her escape.

First, the Singapore police rightly pointed out to the Prince and his hangers-on that they risk being jailed for interfering with police work or obstructing Manohara’s movements. Second was the revealing comment of that taxi driver to the effect that Manohara and her family had nothing to fear from the Singapore police. That such a compliment would come from a taxi driver reflects the integrity of the republic’s police.

Had the Manohara episode happened in Kuala Lumpur, our Chief of Police would be kissing the Raja Temonggong’s hand and asking for forgiveness for “interfering” with royal affairs. The Chief would also probably give Manohara some fatherly “advice” to return to her husband and be a “good” and “obedient” wife.

Alas, we see this blind royal genuflection even among the highest echelon of our leadership. Despite the horrifying details related by Manohara, Deputy Prime Minister Muhyuddin saw fit to comment that the Malaysian government does not want to get involved. “I think this is more of a personal matter,” he was reported to have said. “We should not be dragged into this situation so we want to just leave it as it is,” he continued.

Muhyuddin as Deputy Prime Minister ought to know that once a crime is committed, or alleged to have been committed, then that is no longer a private matter. The state must have an interest in that. That is our Deputy Prime Minister for you. He had so quickly forgotten that he was sworn to uphold the laws of the country. A crime is a crime regardless of who had committed it. And spousal abuse is a crime.

Then there is Nazri Aziz, Minister in the Prime Minister’ office; he is still waiting for a formal complaint! Obviously he did not read his party’s paper, the NST! Poor Aziz would wait till it snows in Malaysia if he were to think that Manohara would trust our institutions well enough to lodge a police report here! This monkey of a minister just refuses to see anything until it is pointed out to him. It did not occur to his thick skull that he should be the one to direct the police to investigate. If nothing else, to protect the integrity of the palace if indeed Manohara were fabricating her allegations.

If Muhyuddin and Nazri could not say anything sensible, they should just shut up. There is no need to embarrass the country. Come to think of it, that is good advice for all our leaders. I wonder if Nazri and Muhyuddin have a daughter; how they would feel if she were to be abused by her husband. The ministers’ utterances were at best boorish; at worse, reprehensible.
Second is the reputation of Singapore’s police in the eyes of the island’s taxi drivers. “… [T]he police would definitely protect us regardless of who we were, whether we were foreigners or locals, whether we were rich or poor,” one driver told Manohara’s family. I wonder what our taxi drivers think of our own police force if we were to engage them in candid conversations.
Here would be some realistic samples. “The last time those bastards stopped me they demanded no less than RM200!” Another: “That huge mansion on the hill, that’s the police chief’s second house!” These supposed comments are not figments of my florid imagination. Witness what happened to former Deputy Prime Minister Anwar Ibrahim at the hands of the Police Chief. Anwar was even cockier and more certain of his power than Muhyuddin could ever hope to be. Yet that did not protect Anwar.

The scary part of that ugly Anwar incident was not the rogue Chief of Police rather that the assault occurred in front of at least two senior officers. They did not see fit to restrain their brute lawless chief; they also chose to remain silent when the subsequent controversy erupted. They witnessed a major felony being committed and chose not to stop or report it. They were guilty of being accomplices to a major crime as well as obstructing justice. Yet those two officers still serve His Majesty’s Government. That is the Royal Malaysian Police.

It is tempting to condemn Malaysians generally, as many are wont to, for the abject performances of our leaders and institutions. It is after all difficult to separate leaders and institutions from the people.

Seen in this light, the exemplary performance of Kadar Shah Sulaiman, UMNO’s Muar branch chief, deserves much praise and wider recognition. Clearly he saw his duty to a suffering fellow human greater than that to a sultan or sultan’s family. Kadar is truly a modern-day Hang Jebat; he makes us all proud.

The shenanigans of Malay royals are not news. As for the credibility and reputation of our mainstream media editors, now that would be news when they showed any! Currently their reputation may only be slightly less soiled than that of the sultans. Our leaders and institutions are not much better. Given such a milieu it is easy to be pessimistic. Yet amidst such gloom we can occasionally be pleasantly surprised. Kadar Shah Sulaiman’s action assured us that there still exists some humanity among Malaysians. It also shows that one brave soul can indeed make a difference.

As for our editors in the mainstream media, do not expect a mea culpa any time soon; they still delude themselves into thinking that they are doing a swell job. They do not bother with “even a perfunctory attempt at verification.”

New guards vs Old guards

This summer will be ugly

World Trade, Baltic Dry And Green Shoots - By Financial Ninja (27/6/09)
Financial Ninja
Saturday, 27 June 2009 09:37

25 June, 2009

[FF Editorial: Anyone who still entertain the stupid idea that there are green shoots and that they will sprout and grow, ought to visit a psychiatric ward. There was never a recovery but that spun by Wall Street. This summer will be ugly.]

World trade has collapsed and shows little signs of recovery. Japan posted a 41% yoy drop in exports. The Baltic Dry Index (BDI) bounced quite a bit off the lows, but has now started to stall.

As more shipping capacity comes online (yeah they're still building like crazy) and demand continues to slide (yeah demand is still cliff diving) expect the BDI to curl over and plunge.

Box lines staring at $50bn revenue collapse: "TOP container lines could see $50bn or more wiped off their combined revenues this year as conditions continue to deteriorate, industry experts predict.

A new forecast from shipping analyst Alphaliner puts the anticipated drop in revenue from 2008 levels at $40bn-50bn.

This is broadly in line with Drewry Shipping’s projection of a $55bn collapse in revenue from last year’s income of $220bn, which will catapult the entire industry deep into the red.

Drewry said container lines would only be able to find savings of around $30bn, leaving a gap of $25bn, which will push the industry from a modest collective profit in 2008 to a massive deficit of around $20bn in 2009.

This is down from a very early projection Drewry prepared before first quarter results were published.

Alphaliner’s latest forecasts are also based on the performance of top lines in the first three months of the year, when income of those monitored plunged 35% as volumes collapsed by 20% and average freight rates declined 15%.

A survey of 11 of the top 20 lines that report a breakdown of their liner shipping results found that revenue in the January-March period shrank to $14.5bn from $22.4bn a year earlier.

The 11 lines surveyed account for 45% of total fleet capacity.

Of those 11, the two big Chinese lines, China Shipping and CoscoContainer Lines saw the biggest percentage decline, each suffering a drop in revenue of more than 50%.

World number one Maersk Line posted a 28% drop, the smallest reported. Other global carriers saw their revenue contract by about 33%-40%. Figures for Mediterranean Shipping Co, Evergreen and CMA CGM were not included.

Alphaliner noted that no region had been spared in the latest slump. Volumes were down in all parts of the world, leaving carriers unable to shift capacity from a weak trade lane to one faring better.

Furthermore, NOL’s latest results “suggest that there is still some way to go before any recovery is seen,” Alphaliner said.

Trade conditions continue to deteriorate. Drewry reported that average spot rates from Hong Kong to Los Angeles slid over the past week to $914 per loaded 40 ft container from $921 a week earlier and $2,043 in June 2008."

Value of Japan exports falls 41% year on year: "Japan's tentative export rebound faltered in May as shipments fell 41 per cent by value year on year amid a rising yen and continuing weakness in sales in key markets for the nation's electronics and cars.

While most economists believe the world's second largest economy is bottoming out after suffering its sharpest postwar slump, yesterday's trade statistics highlight the shallow roots of a recovery likely to remain highly reliant on external demand and debt-funded fiscal stimulus.

May's year-on-year decline outpaced the 39 per cent drop recorded in April. On a seasonally adjusted month-on-month basis, exports slid 0.3 per cent in May, after having risen in both March and April."

The Crisis of Common Sense: Is It So Difficult To Understand The Financial Crisis?

Thinking & Common Sense

God gave us a brain to think, to think naturally and in simple terms, and not in a complicated way.

When we think naturally and use common sense to address problems we will be able to arrive at simple solutions.

But our education system tortures us mentally and forces us to think in complicated ways. Our teachers, economists, politicians and so-called experts in God and religion make mountains out of mole-hills, turning simple truths to complex arguments and “scientific theories and equations”.

These experts need to make things look difficult to survive and to make sure that we have to rely upon them for solutions. It is often said that, “in the land of the blind, the man with one eye is the King”.

Thinking used to be a pleasure and so very invigorating. But now experts have ensured that thinking is difficult and tiring, so burdensome, that we don’t think at all.

The result is that common sense is thrown out of the window, and we have been conditioned to rely on our mental crutch, the so-called experts to think for us.

How sad.

It Is So Difficult To Understand The Financial Crisis

Many have expressed to me that they are overwhelmed by the complexity of the global financial tsunami and are absolutely confused as to how to prepare and survive the crisis.

When I explained in simple terms, they refused to accept the explanations as to them “it was too simple. It must be more complicated as otherwise how can the crisis become a global fiasco?

Consider the following and my simple explanation:

1. financial engineering: new ways of gambling

2. Investors: gamblers

3. Stock & Futures Markets: casinos

4. Financial Analysts: casinos’ salesmen / women

5. Bonds: I.O.Us.

6. Banks: Dishonest Money-lenders (actual money-lenders licensed not as banks, but as money-lenders, cannot create “money out of thin air”. They have to use their own capital – 100% to lend)

7. Currencies / fiat money toilet papers

8. Derivative markets: ponzi scheme

So many people have difficulty accepting my explanations as the simple reality. This is even after the recent exposé of the US$50 Billion fraud by Bernard Madoff, the former chairman of NASDAQ. He declared to the FBI, that his scheme was essentially a Ponzi scheme (i.e. using one set of “investors’ money” to pay off an earlier set of “investors”).

Banks worldwide have collapsed!

Why?

Two reasons – (i) they gambled at the casino and lost trillions and (ii) almost all their borrowers that borrowed huge sums (leveraging 30 times or more i.e. if a borrower has $1 million capital, he can borrower $30 million) have defaulted.

Common sense tells us that if our income is only $X and we borrow 30 times in excess of $X, there is no way that we can repay the debt, unless our gambling bets pay out in excess of 30 times the original amount of $X.

Common sense tells us that if our total family monthly income is e.g. RM3,500, we cannot afford a lifestyle that requires a monthly expenditure of RM10,000 financed by credit-cards with only 5% monthly payment on the outstanding. When interests start piling up on the accumulated monthly outstanding, a point will be reached whereby the cardholder cannot even keep up with the payment of the interests. The cardholder defaults and he gets sued by the lawyers acting for the credit-card companies and or banks.

Common sense tells us that if you are conned into buying something allegedly worth US$500,000 when its actual value is US$5,000 and you borrowed to buy the inflated “asset”, there is no way that you will continue paying the installments and the interests on such an acquisition. The bank on the other hand is stuck with an “asset” supposedly worth US$500,000 but its actual worth is only US$5,000 or less.

Common sense tells us that the banks and the governments (fearing a systemic banking collapse) will lie and cover up the con-game until it cannot cover up anymore as too many banks are having the same problems and more importantly, the con-game cannot be covered-up anymore because borrowers are walking away and saying to the banks and governments – “You conned us, you take the blame.”

Common sense tells us that these so-called assets which “investors” have invested cannot be real assets, but mere papers masquerading as assets (such as CDOs, synthetic CDOs and CDO Squared – toilet papers). Therefore, so-called sophisticated “investors” were borrowing toilet papers to “invest” in toilet paper assets!

Common sense tells us, and thinking naturally and in simple terms will enable us to conclude, that only greedy people can be lured by such con-games and that when gambling at such casinos, these so-called sophisticated investors were not using common sense.

Common sense tells us that we, the remaining hardworking people should not allow any government to use our tax revenue to bailout such reckless and greedy b@#st@#ds.

Common sense tells us that when gamblers lose millions at the Las Vegas, Macau or Genting Highlands casinos, no government can justify and or dare to bailout such stupid and greedy gamblers. We would vote them out of office.

Common sense tells us that since all these “clever people” by their reckless, irresponsible and fraudulent conduct have destroyed the economy, they should be prosecuted and sent to jail and the keys thrown away!

Common sense tells us that a system that allows such frauds and gambling should be banned and made illegal.

Common sense tells us that when common thieves rob a jewelry shop or a bank, they are sentenced to long terms of imprisonment and whipped as well, these sophisticated thieves should be likewise be whipped and sent to prison for life imprisonment, as their destruction is a million times more devastating than the common thieves!

Common sense tells us that when times are hard, we should be prudent and thrifty to overcome and survive the hardships, so why are we encouraged to borrow more and more and to spend, spend and spend?

Common sense tells us that when a shop is offering a discount, a reduction in the price of a product, the shop-keeper is encouraging us to spend and buy the goods.

Common sense tells us therefore, interest charges and penalty interests are the cost of a debt / borrowings from the perspective of the borrower and revenues and profits, when the debt is fully paid, from the point of view of the lender.

Common sense tells us that it is not out of kindness that banks lower interest charges. Like the shop-keeper, it is to encourage more borrowings. More borrowings mean more debts and ultimately more profits for the bankers.

Common sense tells us that we should not get into debts unnecessarily and not to borrow to purchase things that are not within our income and our ability to repay.

Common sense tells us that we should not commit fraud and or be a party to a fraud.

Common sense tells us more importantly, not to be greedy and lust for material wealth.

Common sense tells us that we should be angry, very angry with the so-called “sophisticated and up-right people” who commit fraud and the regulatory authorities and political leaders who cover-up their crimes.

Finally, common sense tells us that we should take action to put a stop to these crimes and scandals.

Please use common sense and do something before it is too late!


Matthias Chang is a prominent barrister and author based in Malaysia. His website is www.FutureFastForward.com


Matthias Chang is a frequent contributor to Global Research. Global Research Articles by Matthias Chang

Common Sense Planning For Booms and Busts © - By Matthias Chang (26/6/09)
By Matthias Chang
Friday, 26 June 2009 07:57

This article is an edited and summarized version of my seminar paper, Common Sense Planning For Booms And Busts© which I first presented soon after the 1997 financial crisis and which I has since developed further.

The target audience for this article is the hands-on managers and policy makers who are presently confronted with the challenges of overcoming the present painful global financial tsunami.

I have deliberately omitted voluminous data and complex graphs so as to enable my readers to grasp the essence of my analysis.

You will not find this approach in leading international business schools and or management seminars / forums by leading management gurus. We say this because we have brainstormed with executives and consultants from impeccable academic and business backgrounds over the last twenty-five years, and what we found most often missing in our discussions is the application of the tool of common sense in addressing and resolving complex issues.

We have heard often enough the refrain, Come on, it cannot be that simple, there must be a catch. Another common frustration is, we have spent hundreds of man hours on this and we have covered all the angles, and we can’t see how you can get us out of this mess.

We offer no magic bullets and or have we asserted that we have all the answers. But what we do assert is that a proper mindset, one based on common sense is often more effective than complicated theories and equations. I believe that the present crisis has taught us that rocket scientists and Nobel Laureates are not infallible. In fact by ignoring common sense, they have contributed substantially to the present financial debacle!

Often than not, when taking a simple, street wise approach our critics would never cease to caution and remind us that if what we say is right, surely the leading scholars of Harvard and other leading international business schools would have considered it and if applicable, used it.

Take the present crisis, how is it that all the leading international banks and fortune 500 companies were caught with their pants down? The IMF, the World Bank and central banks all over the world were surprised by the scope and depth of the crisis and still groping in the dark for answers and solutions.

At this juncture, we would like all of you to take a break and read as many annual reports of leading companies from all sectors of your economy as well as the multi-nationals for financial years 2005 to 2007. Read also the reports of central banks, the IMF and the World Bank.

Without exceptions, the Chairman’s message to shareholders of these companies has been positive, forecasting continued growth and surging profits for years to come. The good times are here to stay. Financial engineering has assured us that the sky is the limit in wealth creation.

Treasury officials and central bankers were echoing the sentiments in unison, and when the crisis was all too apparent, experts in Asia and elsewhere (especially central bankers) were chanting the mantra, Asia has de-coupled, and will not be affected by the crisis that first exploded in the US.

The rest, as they say, is history.

But those of us who used common sense took pre-emptive measures as far back as early 2006 and parked our hard earned income in safe havens.


A LESSON IN WISDOM

There was a wise businessman who always liquidated his major investments at a certain period and would be severely criticized by brokers, investment bankers and smart graduates from business schools and the much touted advisers from leading international management firms for cashing out too early and missing the big hits. I was with him in the 80s and in the 90s when this tongue lashing was meted out and we would just silently soak up all the verbiage and gratefully thank them for their unsolicited guidance.

What arrogance, when this businessman was a multi-billionaire and none of the so-called experts were near the ranks of multi-millionaires.

This is what he taught me:

1) Don’t be greedy.

2) Be content with the pre-determined profit targets that you have set.

3) Count your blessings

4) Have no regrets if you could have earned more.

5) Nature have seasons, profit-making is also seasonal.

6) Embark on a business when you are ready and not before.

7) Prepare for adversity, for the winter.


Let me assure you that you won’t be taught the above 7 principles in world renowned business schools. Neither will policy makers apply this common sense and wisdom in managing their economies.

The wise businessman also taught me that these principles apply equally when formulating national blueprints such as five-year plans.


MOTHER NATURE AND BUSINESS CYCLES

Mother nature has taught us for centuries that there is a time to plant, a time to grow, a time to harvest, a time to prepare the ground and a time to rest. And there are the four seasons; each assigned a specific role in the overall scheme of things.

Is the business cycle any different?

In every seminar that I had the opportunity to participate either as the leader or as a delegate, I have never ceased to ask the attendees whether they believe in cycles, specifically business cycles and the response has always been unanimous – it is fundamental.

Yet, my colleagues and I seem always to be in the minority when we examine business plans and or national blueprints for development and growth. We do not find any correlation between the plans presented and the relevant business cycle and or the specific period of the business cycle.

The booms and busts, euphoria and despair, alternating as certain as the sun rises in the morning and sets in the evening.

In our daily lives, we prepare for sunrise, to go to work and earn a decent living and after a day’s work, prepare to retire and the well deserved rest.

How strange that we do not apply this nature’s principle in business.


SURVIVING BUSINESS CYCLES

To illustrate the above principles, we have for the purposes of this article taken a business cycle of ten years. [1]

In our strategies, we have always acknowledged that different skills and mindset are required for:

A) a downturn, and

B) an upswing

Thus in our training modules, we have emphasized the development and establishment of the following management teams:

A) The Fire Brigade / Trauma Team

B) The Recovery Team / Money Makers

Let me now explain our common sense approach to planning.


Diagram 1 – Planning For Business Cycles



At Point A which is the bottom of the preceding business cycle, our Recovery / Money-making team would have in the 3-4 years of the downturn been preparing itself for the upswing. Our Fire-Brigade / Trauma Team have retreated to enjoy their well deserved rest.

Most plans, no matter simple or complicated has a duration – from inception to implementation and the realization of profit / loss. Likewise, any economic policy of a government has a similar cycle. And for the purpose of this article and illustration, this duration ranges from three to five years.

Thus our strategy is to ensure that our business plan or policy achieves full realization at Point A-1 with possible spillover to Point B-1. But, not beyond Point B-1.

This is because it is inconceivable for anyone to pinpoint accurately to the year or month the exact peak of any business cycle. In the result, invariably at Point B-1, we are already prepared for any adverse situation.

We have consolidated our growth and its benefits and harnessed our reserves for any eventuality, specifically a downturn – be it a major or a minor disruption (cycles within cycles).

At this juncture, we would like to stress that nothing is more crucial than the need to recognize and have in place teams with the relevant skills and mindsets that at a moment’s notice can be deployed and or re-deployed as circumstances dictate.

At Point B-1, the entire management would be in a pre-emptive mode for a down turn and the tools and probable answers and solutions are on the table. While we may not be able to anticipate all the outcomes, specifically a “black swan event”, nevertheless, the mindset is such that demoralization would not set in and be an issue and that no major restructuring in terms of organization or human resource are required to meet the challenge.

From Point B-1 to Point C, our Fire-Brigade / Trauma team is better prepared than any team that may exist in our competitors’ organization. Typically, we would be at the minimum, nine months ahead of anyone and have a better chance of surviving any crisis.

The finance resources are in place to meet the challenge as we would have unwound our positions and reduced and or minimized exposures.

The right team is already looking out for fires to put out, and is assured that there is a back up team to rebuild when the fires are put out.

Anyone who disputes that there is a necessity for such a team - well trained and with specific skill sets even in times of growth and exuberance is a buffoon.

My simple rebuttal to any criticism is this: If you disagree, why do we have a fire-brigade in every burrough, district, county etc. More lives would have been lost in September 11, 2001 had there been no fire-brigades to help those trapped in buildings.

A trauma team at the emergency ward have different skills and mindset and are better prepared for such eventualities than your physicians in the general ward. Period!

It must also be pointed out that at Point B-1 to Point C, the Recovery / Money-making team is not idle. This team is running parallel with the Fire-Brigade team as they are now deployed to re-train for new opportunities and acquire new skills. The two teams are running parallel but not interfering with each other. They have a common objective – ride out the crisis and recover before anyone else!

They have different mindsets and skills.

They have to assess the extent of the devastation to the organization, the industry, the market and related markets, the national economy as well as the global economy. They are already primed to re-tool and to anticipate future needs.

At Point C, the Recovery / Money-making Team would be in the same position and mindset as they were at the previous Point A ten years ago.

The cycle repeats itself when we reach Point C-1.


FUNDAMENTAL PRINCIPLE

Given the above explanation and illustration (for simplicity sake), it is incumbent that every organization must have in place at all times the aforesaid two teams.

We do not subscribe to the use of the blunt tool of retrenchment when crisis sets in because its application reveals and exemplifies a management team that is devoid of any common sense and competency notwithstanding sterling performance during the boom period. For if a manager cannot deliver profits during a boom period, why is he/she still hanging around?

While we take cognizance that frequent turn-over of human resource is inevitable, the very existence of the infrastructure for the two teams ensure that at any one point in time, the teams are able to renew and rejuvenate to meet their specific challenges.

Absent such an organizational structure, the members of the usual management team are often depleted during the crisis, because they may have been terminated, retrenched and or resigned and often blamed for the inevitable losses during the downturn. The surviving members would be exhausted when bottom is reached and would of necessity take a longer time to recover. Some may not even recover, for want of a recovery team!

Neither do we want a situation, as in the case of the American banking giants, where the culprits who caused the devastation are retained. They were neither fit to be in the Fire-Brigade Team or the Recovery Team.


PLANNING FOR FIVE YEARS OR TEN YEARS

We take the view that an organization should always plan for a ten year cycle. By this I mean, to plan for the major cycle as appropriate for the particular industry or market etc. But within the major cycle, there must be in place plans for any erratic short cycles which may prolong or shorten the major cycle.

Planning for the major cycle is the overall strategy, while planning for the minor cycles are the tactics that we need to use to ensure we survive and prosper during the major cycle.

We hope you will appreciate why at the beginning of this article, we requested that you take a break and read as many annual reports of leading corporations in your industry and five-year plans of countries.

Should we be surprised when a corporation which plans for a major acquisition or an investment and then maximizes its leverage at the peak of a cycle files for bankruptcy when a crisis sets in?

Have you ever come across a government official in the treasury or a central bank that plans for the inevitable downturn?

They have not, because they are mindless and cowardly and they just echo what the politicians want them to say.

What we have instead, is the deliberate creation of one bubble to replace the previous bubble that has burst, thereby ensuring that the next crisis will be more devastating.

So long as the global financial system is grounded on central banks, fractional reserve banking and the insidious shadow money-lending system, there will always be cycles of booms and busts.

This is the sad state of affairs of all governments. They take their citizens for fools, as if they are not mature enough to appreciate the consequences of a downturn and therefore must be fed with sound-bites so as to sustain the “feel good factor”.

Election or re-election to public office is paramount and nothing must derail this objective, even to the extent of lying.

Right now, the Malaysian government is in the process of formulating the 10th Malaysian Plan, another five-year plan to continue the policies of the 9th Malaysian Plan which was for the period 2006 to 2010. I shudder to think that Malaysia may be planning out of the context of the “business cycle” and not even from a ten-year perspective.

The previous five-year plans have served Malaysia well, but we must recognize that the first quarter of the 21st century will be turbulent years and anyone who thinks that the present global crisis will end and recover by 2010 need to re-examine the nature of this crisis.

It is a systemic crisis and it will be prolong. Different skills and mindsets are required to address these challenges.

We must plan beyond blindly adopting the Stimulus mantra!

It behoves all responsible management to use common sense when planning.

We wish our readers every success in their plans for the future.



Endnotes


1. To avoid any misunderstanding, we readily concede that cycles can be of different durations and there are cycles within cycles, but this will not affect the thrust of the thesis that we should plan in anticipation of cycles. The critical issue is: do we have in place the relevant skills and mindsets for different periods of any one cycle to maximize profits and outcomes and minimize losses and disruptions? In Malaysia, we personally experienced three major cycles of ten years duration, cycles ending in 1987, 1997 and 2007.

Stay hungry, stay foolish.

"The wisest have the most authority" -Plato

Somebody had better listened...

THE CORRIDORS OF POWER

Raja Petra Kamarudin

SULTAN OF JOHOR REJECTS 3RD BRIDGE - BUT WHY?
Today Online

In what some see as a renewed show of royal power in the game of Malaysian politics, the Sultan of Johor has rejected the proposal for a third bridge with Singapore.

Sultan Iskandar Ismail did not give a reason for doing so, but observers thought it could be because the royal family had not been consulted on the proposal, which was first mooted by Prime Minister Najib Razak on his visit to Singapore last month.

The Sultan’s impromptu decree was delivered by Tunku Mahkota Tunku Ibrahim Ismail at the state legislative assembly opening yesterday.

“I was told by the Sultan that he does not agree with the proposal to build a third bridge,” he said.

To political scientist Alan Chong, there appears to be “some kind of tension being played out between Mr Najib’s government and the Johor royal family”.

“I would suspect there is internal politicking here and the bridge is used as a pawn,” said the assistant professor with the National University of Singapore. “It is also possible this is a case of the Sultan being unhappy about an economic project being built in his state, but conceived at a federal level. One cannot be too sure what is the primary issue here.”

The proposed bridge, which Mr Najib has argued would bring development to the eastern side of Johor up to Desaru and Mersing, has already been drawing flak from some Umno leaders who were concerned Malaysia would have to lift the ban on the sale of sand to Singapore before the bridge could be built.

This was after Minister Mentor Lee Kuan Yew said it would not make sense for Singapore to agree on a third bridge if Johor does not lift the ban, which has been in place since 1997.

The Sultan’s remarks are not the first time he had caught people offguard with comments that impinged on bilateral relations with Singapore. Last year, also at the launch of the state assembly, the Sultan had vowed to reclaim what the Malaysians call Pulau Batu Puteh - Pedra Branca - to Singapore.

Responding to the Sultan’s stand yesterday, Mr Najib reiterated that the government had not decided whether to go ahead with the bridge, and that an in-depth feasibility study must be done first to determine if it would benefit both countries.

There was still a lot of time to discuss the matter with the Sultan and the Johor government to find the best solution, should the project go ahead, he added according to Bernama news agency.

None of the analysts TODAY spoke to thought the matter was a major setback for Mr Najib.

Mr Yang Razali Kassim, a senior fellow at the S Rajaratnam School of International Studies, said: “He was probably expecting a reaction from the ruler of Johor, and a rejection may not be to his surprise given the precedence that we have seen in Johor and the capacity of the Sultan to be independent minded.

“I think we should see this in the context of the dynamics of policy-making in Malaysia ... You have the federal government making decisions but (it) also has to consider other factors, at the state level especially. In this case, the state of Johor sometimes can have as much input as the federal government in matters concerning relations with Singapore. “

How Mr Najib will resolve the issue will be watched with interest. “I don’t he is going to be uptight about it, he has a long-term perspective when it comes to building relations with Singapore,” said Mr Yang Razali. - - AGENCIES, WITH ADDITIONAL REPORTING BY ZUL OTHMAN

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One day, a couple of years back, all the Johor Wakil Rakyat (Parliamentarians and State Assemblypersons) were invited to the Johor palace for an audience with the Johor Sultan. They all lined up and one-by-one had to sembah and kiss the Sultan’s hand (the normal protocol when one is having an audience with a Ruler).

Syed Hamid Albar, who was then the Minister of Home Affairs, was of course also in the group since he was one of the Johor Wakil Rakyat. But when it came to Syed Hamid’s turn to sembah the Sultan and kiss his hand, Tuanku pulled back his hand and placed it behind his back.

Syed Hamid was quite taken aback and did not know how to respond. The Sultan then told Syed Hamid to remove his songkok, which he did. The Sultan then quipped that there is a lot of sand in Syed Hamid’s songkok, after which Tuanku turned his back on Syed Hamid.

Now, to those not familiar with the issue, they would either not have noticed this, or, if they did, would probably have found this incident most puzzling. But it is not really that puzzling. The Sultan was sending Syed Hamid a message that he is aware that Syed Hamid’s family is involved in selling sand to Singapore and that the sale of sand to Singapore is attached to the bridge deal.

This means Singapore gets the sand it needs to do their land reclamation and they would in turn agree to the building of the new bridge to Singapore. And the reclaimed land, which will be done on the Malaysian side of Singapore, will not only substantially increase the land area of Singapore, it will also reduce the sea area and push back the common boundary closer to Malaysia. This means part of Malaysia’s sea zone (or whatever you call it) will now become Singapore territory.

Tun Dr Mahathir Mohamad was bitterly opposed to this. And this, plus a host of other reasons, was why he wanted to bring Tun Abdullah Ahmad Badawi down. But at the top of Mahathir’s list of pet hates was the selling of sand to Singapore and linking the sale of land to the approval Singapore would give to the building of the bridge. In other words: no sand, no bridge.

Mahathir viewed this as Singapore putting a gun to Malaysia’s head. And worse than that was the fact that Malaysia kowtowed to Singapore and agreed that we would sell Singapore the sand it wants in exchange for their approval to the building of the bridge. That was why Mahathir told Singapore to go to hell. If they did not agree to the bridge within their territory then Malaysia would build the bridge within our territory and link it to Singapore’s half of the Causeway.

This was how the half-bridge or Crooked Bridge idea came about. It had to be crooked because a half-bridge, if built straight, would be too short. Malaysia wanted the bridge high enough so that coastal ships could pass below it and this would mean the bridge would be too steep if it was short. The only way the gradient could be made gradual would be if the bridge is lengthened and this can only be done if the bridge meanders rather than be built straight.

Thus the Crooked Bridge idea came about to give it more length and therefore it could be built high without the gradient being too steep.

It may sound like a crazy plan but that would have been the only way Malaysia could have built the bridge without having to sell sand to Singapore in exchange for Singapore’s blessing or approval. Build half a bridge, on Malaysia’s side only, and forget about building it on Singapore’s side as well. Then link that bridge to the Causeway. But the bridge would have to be long to be able to be high and the only way it can be long would be not to build it straight but to build it crooked.

Then, when Abdullah took over as Prime Minister, he cancelled the Crooked Bridge and Mahathir went on the warpath. He went on the warpath not so much because the Crooked Bridge was cancelled but more because it was cancelled to make Singapore happy. This was the height of no-no as far as Mahathir was concerned.

Well, Abdullah is no longer Prime Minister. The Prime Minister is now Najib Tun Razak. But Najib is doing exactly what Abdullah did. He is pandering to the wishes of Singapore. And that makes Najib no different from Abdullah.

Last week, when the ‘third bridge’ was announced, Mahathir hinted his disapproval by commenting that if Malaysia sells sand to Singapore then certainly that Island State would agree to anything. That was already the first signal of Mahathir’s displeasure.

Now, the Johor Sultan says he is not agreeable to this third bridge and Najib quickly clarified that it is merely a proposal and that nothing has been confirmed yet. It appears like the Sultan is not happy and therefore Najib may have to rethink the plan. Actually it is not the Sultan who is not happy. It is Mahathir who is not happy. The Sultan is just giving Najib a fallback plan. If Najib announces that the third bridge is to be aborted after all, then everyone would say that Mahathir pressured him into cancelling it. Now they can cancel it and say that they did so because of the Sultan and not because of Mahathir. It is a face-saving exit plan for Najib.

But the damage has been done. Mahathir now sees that Najib is no different from Abdullah. In fact, many had warned Mahathir that if he ousts Abdullah and Najib takes over there is no guarantee he can control Najib. He thought he could control Abdullah but this was proven wrong. Najib may prove equally beyond control just like Abdullah was.

Someone went to meet Rosmah Mansor, the so-called ‘First Lady’, to tell her that Mahathir is not happy. She responded by saying that they owe Mahathir nothing. Najib made it as Prime Minister on his own accord, she replied, not through Mahathir’s help. She also whacked Mahathir for appointing Abdullah as Prime Minister instead of Najib who should have been Prime Minister back in 1 November 2003. Najib was ‘robbed’ of six years. He should have been Prime Minister six years earlier instead of wasting his time as Deputy Prime Minister.

This is Rosmah’s way of telling Mahathir to go to hell.

Rosmah knows that Mahathir is out to get her. Najib can remain the Prime Minister but Rosmah can’t remain the First Lady. Najib has to choose between being Prime Minister or stay married to Rosmah. Rosmah responded by saying that there is no way Najib can divorce her without splitting half of everything he owns with her.

Yes, Rosmah is out to get Mahathir before he gets her. Who is going to kill whom first? At this point of time I would not dare say. If it were anyone else I would put my money on Mahathir. But if it involves Rosmah then I would not be too hasty as to give Mahathir a clear win.

Mahathir may have finally met his match. He defeated so many people in the past starting from Tunku Abdul Rahman right up to Anwar Ibrahim. But this time he may yet hit the dust. And the one who will be trampling him in the dust would probably be that woman who goes by the name of Rosmah Mansor.

"Hello, Tan Sri Sanusi? Hisham speaking..."

Raja Petra Kamarudin

Hisham going to the ground to look at Ah Long problems
By MAZWIN NIK ANIS, The Star

PUTRAJAYA: Home Minister Datuk Seri Hishammuddin Hussein wants to get to the root of the loan shark problem and will go to the streets on Monday in search for answers.

“I think it is time for me to go to the ground to look at this problem.

“I will visit the hotspots and find out more on this loan shark culture that so many people seem to be depending on and later become victims to.

“I want to meet whoever, be it Ah Long or victims - whoever I can catch first,” he told reporters yesterday.

The number of incidents in which defaulters were attacked and even kidnapped by loan sharks has been in the media limelight of late, and even got the attention of Prime Minister Datuk Seri Najib Tun Razak, who expressed shock at the level of cruelty inflicted on defaulters.

One of the more prominent cases involved three men who were rescued by police last month after being held captive for two months by loan sharks when they failed to settle their debts.

The victims, aged 25, 34 and 49, were abducted from Segambut, Semenyih and Gombak and held in a shoplot in Seri Kembangan after failing to settle debts of between RM1,500 and RM4,000 each. They were found chained by their necks and legs, and showed signs of having been beaten by their captors.

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I must say the above news report sounds good. But that is all it is meant to be, to sound good. Okay, Sham will do an impressive walkabout. Of course, the walkabout will have to be with members of the media in tow. He will then issue a ‘powerful’ statement, which will probably be given 45 seconds airtime on RTM and TV3. It might even make the front pages of the newspapers the following day. But that will be about it.

When the Kampong Medan race riots erupted back in the early 2000s, Sham also ‘went to the ground’. He visited the University Hospital and spoke to one Indian boy who had lost an arm. Some Malays had chopped off his arm with parangs. The Indian boy related how he was lying on the ground in excruciating pain while a policeman just stood at a distant watching.

The Indian boy shouted for help and the policeman walked over to him. The boy pleaded to be sent to hospital. The policeman stepped on him and said, ”Pergi mampuslah kau Keling.” He then walked away and left the Indian boy to die. He did not die though. He spent a long time in hospital recuperating from his wounds minus an arm.

Sham ‘instructed’ the Ministry officers who were with him to ‘look into the matter’. However, the matter was never looked into and no one was ever brought to book even though the Indian boy was able to identify the policeman concerned.

So much for Sham ‘going to the ground’ to investigate the Kampong Medan tragedy and the role the police played in protecting the citizens from violence and racism. Assume this latest ‘going to the ground’ expedition to be as fruitless as the one he conducted soon after the Kampong Medan race riots.

I have written about the problem of Ah Longs a month or so ago. In that piece I mentioned that about 30 years or so ago the Malay Chamber of Commerce did a study to assess the impact of Ah Longs on small-scale Malay businesses. The study was done in the small fishing town of Dungun in Terengganu.

What we found out was that nearly every Malay petty trader and fisherman in Dungun borrowed money from Ah Longs. The rate of interest they paid was 4% a day. So, for every RM1,000 they borrowed, they had to pay RM40 per day.

Every day, the Ah Longs would send ‘runners’ to collect RM40 from the petty traders and fishermen for every RM1,000 they borrowed. That’s all they had to pay, RM40 per day for every RM1,000 borrowed. The runners were not interested in collecting the principal. They just wanted the interest. The petty traders and fishermen can go on owing on the principal as long as they paid the RM40 for every RM1,000 they borrowed.

This meant the petty traders and fishermen would continue owing the Ah Longs the money they borrowed for the rest of their lives. And the Ah Longs would in turn continue collecting the interest without touching the principal for the rest of their lives. It was like making a pact with the devil. The devil owned you until the day you die and long after you have entered your grave when your family would then have to take over your debt and would have to continue servicing the interest on the never-never.

This matter was brought to the government’s attention but nothing was done about it. And that was 30 years or so ago.

Tan Sri Sanusi Junid can relate a similar story that involved him even earlier, about 40 years or so ago. At that time he was with the Chartered Bank. And the story goes as follows.

Sanusi had tendered his resignation and his Mat Salleh boss called him and asked what it would take to get him to withdraw his resignation and stay with the bank. Sanusi replied that if they gave him a few million Ringgit (equivalent to hundreds of millions today) to lend to the Kedah farmers under a special loan scheme then he would probably stay with the bank.

What Sanusi had discovered was that nearly every Kedah farmer owed money to the Ah Longs and were paying an exorbitant rate of interest just like what the petty traders and fishermen in Dungun were subjected to. The interest came to about 100% per year, which is still comparatively lower than the Dungun rate of interest, which was more than 100% per month.

The Chartered Bank agreed and Sanusi arranged for his officers to go down to the padi fields on motorcycles to look for farmers to lend money to. Eventually, they managed to disburse the money to all the farmers and free them from the clutches of the Ah Long.

Sanusi did not make press statements saying that he was ‘going to the ground’. He just got the bank to agree to give him a few million Ringgit and then he sent his officers into the padi fields to search for farmers in debt. They then gave the farmers loans so that the Ah Longs could be paid off in full and the farmers could be free of the blood-sucking rate or interest.

I suggest Sham just contact Sanusi and get Tan Sri to agree to become an adviser to the government. Sanusi has been handling this problem while Sham was still not wearing any underwear, so he knows what to do. Then set aside RM500 million or so under a special loan scheme to help fishermen, farmers and petty traders escape from their debts. Just go buy off their debts from the Ah Longs.

Even if the government has to finally write-off some of this debt it would still be worth it. If we can spend RM300 million a year on the Terengganu Monsoon Cup and a further hundreds of millions on F1 racing, bicycle races, Merdeka Day celebrations, Prophet Muhammad’s birthday celebrations, and whatnot, what is wrong with writing off RM100 million a year on a more worthy cause?

Prophet Muhammad never asked us to celebrate his birthday. I am sure if we cancel Prophet Muhammad’s birthday celebrations and instead use the money to help fishermen, farmers and petty traders the Prophet would find that more pleasing. And if we also cancel the Merdeka Day celebrations and all those other extravaganzas which cost a lot of money but do not improve our lives one bit that would augur well for the country as well.

I am not a genius. But does it really take a genius to think of all these simple things? Stop the wastage. Just use the limited money we have for the right things. And, as I said, if you don’t know what to do then give Sanusi a ring and ask him what to do. You will be surprised to discover that there are a lot of good ideas in the head of that Tan Sri.

Oh, by the way, if you really want to go to the ground, then investigate the role the police are playing in not only giving the Ah Longs protection but in many cases acting as their runners as well.

It's the economy, stupid!

EKONOMI LAH...BODOH !

APA DIA KERAJAAN PERPADUAN

Saya cukup senang hati melihat apa yang sedang berlaku di arena politik hari ini. Heboh heboh tentang kerjaaan perpaduan ini cukup baik untuk anak anak muda memahami politik.

Politik bukan agama.

Politik ialah perebutan kuasa. Kuasa direbut untuk mendapat kedudukan. Kedudukan untuk mendapat harta benda. Ini hakiki. Jangan cuba di alih-alih atau ditutup-tutup dengan tabir dan langsir.

Manusia memerlukan makanan – makanan ertinya ekonomi.

BerPolitik ialah merebut punca-punca ekonomi.

Zambry merebut kuasa dari Nizar kerana ekonomi. Khalid merebut kuasa dari Toyo kerana ekonomi. Hassan Ali cuba merebut kuasa dari Khalid kerana ekonomi. Guan Eng merebut kuasa dari Tsu Koon kerana ekonomi.

Nasaruddin, Mustapha Ali dan Hadi ingin mendapat kuasa kerana melalui kuasa mereka akan mendapat peluang ekonomi.

Lee Kuan Yew datang melawat sambil menipu kerana ekonomi.

Mahathir ingin terus berkuasa kerana ekonomi.

Anwar Ibrahim dan Pakatan Rakyat ingin mengambil alih kuasa dari Barisan Nasional kerana ekonomi.

Semua ini ialah perebutan ekonomi. Ini samalah seperti Amerika berebut minyak dan gas dengan Russia. Ini samalah seperti Pakistan berebut tanah Kashmir dengan India. Ini samalah seperti Turkey berebut air dengan Syria. Air, gas, minyak dan tanah – adalah ekonomi.

Ekonomi ini ialah duit duit – harta – tanah – bangunan, perniagaan, lesen – semua ini harta yang menjadi rebutan dalam sistem ekonomi kapitalis. Atau untuk menipu Mak Cik Felda ekonomi ini di panggil ekonomi bebas. Tidak ada yang bebas dalam ekonomi kapitalis. Dalam ekonomi kapitalis – sesiapa yang memiliki punca-punca ekonomi akan memiliki kekayaan dan kuasa. Dengan kuasa akan mendapat punca-punca ekonomi. Punca ekonomi ertinya duit dan harta kekayaan.

Ini hakikat. Tak perlu kita berdulak dalik – aaahhh ..oooh ..eeeh lagi.

Agama ialah kepercyaaan. Kepercayaan ini berasaskan keyakinan. Ada yang yang percaya dan ada yang tidak percaya. Ada yang yakin dan ada yang tidak yakin.

Keyakinan agama juga boleh beralih–alih mengikut kepentingan ekonomi. Dulu Hadi mengeluar FATWA HADI. Hari ini fatwa ini tidak dipakai lagi untuk disesuaikan dalam merebut kepentingan ekonomi terkini.

Sekali lagi dinyatakan : Dalam ekonomi kapitalis TIDAK ada agama. Ini tebukti dengan apa yang sedang berlalu sekarang. Malah dalam satu parti yang mengakui asasnya agama pun ada perebutan. Perebutan kuasa ini tidak ada sangkut paut dengan agama. Ini perebutan ekonomi.

Perebutan ini adalah SEHAT jika diakui sebagai perebutan untuk merebut ekonomi. Ianya TIDAK sehat jika ditakrif sebagai perebutan garis agama.

Agama, bangsa, nasionalisma – ini adalah senjata/alat untuk mengolah persetujuan orang ramai akan menyokong satu-satu gerakan. Apakah tujuan gerakan ini ? Untuk memiliki punca-punca ekonomi.

United Malays National Organisation berslogan Hidup Melayu- Ketuanan Melayu untuk menipu orang Melayu agar gerombolan mereka mendapat mengambil punca ekonomi yang dulunya di tangan British dan China. Mereka mahu harta kekayaan dijadikan hak mereka. Ini hakikat. Tak perlu kita berkelentong.

Heboh-heboh tiap-tiap hari di parlimen ilahlah manifestasi perebutan ekonomi. Najib membuat dasar kerana hendak membolot ekonomi. Anwar menentang dasar Najib kerana ekonomi. Disini tidak ada agama atau bangsa.

Agama dan bangsa HANYA masuk dalam hitungan ini jika ianya boleh dijadikan ganja untuk mengolah persetujuan orang ramai – untuk mendapat sokongan.

Pas dahulu di kutuk oleh United Malays National Organisation. Gerombolan ini juga dahulu di kutuk oleh Pas. Ini dilakukan untuk mencari sokongan orang Melayu.

Hari ini gerombolan telah tidak mendapat sokongan Melayu lagi. Jika tidak ada sokongan mereka kalah. Jika kalah - mereka tidak ada kuasa. Jika tidak ada kuasa mereka tidak dapat kontrek dan projek.

Kontrek dan projek ialah ekonomi. Pusing-pusing akhirnya ekonomi juga.

Dalam Pas walau pun mengakui berasaskan agama kini telah terbukti bahawa ekonomi lebih kuat pengaruhnya dari agama.

Didalam Pas ada yang takut dengan Pakatan Rakyat kerana dasar KETUANAN RAKYAT. Dasar ini bukan dasar agama. Bukan dasar bangsa. Tetapi dasar untuk orang ramai – ertinya untuk semua – China, Melayu, India, Kadazan, Murut , Bajau dan Lain-Lain. Ertinya siapa bijak – berilmu, tidak malas, rajin bekerja – maka mereka akan berjaya.

Berjaya disini ertinya ada duit. Duit ialah ekonomi. Pusing-pusing mesti sampai juga kepada ekonomi.

Orang yang malas, pencari kontrek, mencari komisen, jual projek – pastilah TIDAK suka dengan dasar - Ketuanan Rakyat. Mereka takut bertempur disemua bidang. Nak masuk universiti nak pakai kouta. Nak projek nak kouta. Nak cari kerja nak pakai kouta. Nak buat drama tv nak minta slot kouta.

Justeru ketika ini United Malays National Organisation memerlukan Pas untuk masuk ke dalam kandang mereka. Apa yang di janjikan ialah kedudukan politik. Kedudukan politik ialah kuasa. Dengan kuasa akan dapat punca ekonomi.

Ekonomi lagi.

Justeru jangan hairan – terutama anak anak muda - kita patut memahami bahawa yang sedang berlaku dihadapan mata kita ialah perebutan ekonomi. Semua yang berlaku ini tidak ada sangkut paut dengan agama atau bangsa.

Perebutan ini ialah perebutan kelas elit yang kuasanya semakin terhakis. Kelas elit ini diwakili oleh United Malays National Organisation. Kelas elit yang hendak hilang kuasa ini sedang mencari ‘kawan’ dari Peking hingga ke Rusila. Ini pekara biasa dalam politik.

Apa yang maha penting untuk difahami ialah politik tidak ada sangkut paut dengan agama. Sekarang terbukti dengan jelas – serban atau kopiah – hanya pakaian ; bahawa agama hanya digunakan untuk mengolah persetujuan tidak lebih dari itu.(TT)

The 67 billion ringgit stimulus package question.

Economics 101 Revisited - Burn Your Textbooks, Use Common Sense - By Matthias Chang (15/6/09)
By Matthias Chang
Monday, 15 June 2009 09:31

The head of one of the think tanks in Malaysia recently said that Malaysian financial journalists should not be faulted for failing to warn against the global financial tsunami.

What utter rubbish. OK, they may be forgiven for burying their heads in the sand in 2007. But, they did not even get it right in the first quarter of 2008. In the last quarter of 2008, they were still singing praises about the Malaysian economy and that 2009 would register a robust growth.

Maybe the head of this think tank was making excuses for himself and deflecting any criticisms to that of financial journalists. How pathetic can one get?

And now, the Governor of Bank Negara has lately conceded that she underestimated the severity of the impact of the global financial tsunami on Malaysia.

Put it bluntly, such journalists are employed to sell good news so as to lure greedy and stupid investors to gamble in the stock market after the big boys and insiders have made their moves and are waiting to cash out.

Gamblers are driven by herd instincts. They care not about fundamentals. That is why I never hesitated to call them suckers. And they are suckers through and through.

Every country has been following the FED in stimulating the economy and pumping vast amounts of monies into the economy. These experts called it “quantitative easing” instead of the simple term, creating money out of thin air – printing money electronically.

For a technical explanation, I reproduce here an extract from Wikipedia:

The term quantitative easing describes an extreme form of monetary policy used to stimulate an economy where interest rates are either at, or close to, zero. Normally, a central bank stimulates the economy indirectly by lowering interest rates but when it cannot lower them any further it can attempt to seed the financial system with new money through quantitative easing.

In practical terms, the central bank purchases financial assets, including treasuries and corporate bonds, from financial institutions (such as banks) using money it has created ex nihilo (out of nothing). This process is called open market operations. The creation of this new money is supposed to seed the increase in the overall money supply through deposit multiplication by encouraging lending by these institutions and reducing the cost of borrowing, thereby stimulating the economy. However, there is a risk that banks will still refuse to lend despite the increase in their deposits, and in a worst case scenario, possibly lead to hyperinflation.

Quantitative easing is sometimes described as 'printing money', although the central bank actually creates it electronically by increasing the credit in its own bank account.

Examples of economies where this policy has been used include Japan during the early 2000s, and the US and UK during the global financial crisis of 2008–2009.

But seriously, how many Joe Six-packs reading the above extract can fully appreciate the implications and consequences of such policies of central banks the world over?

In my previous articles and in my book, The Shadow Money-Lenders I have given detail explanations, but I still receive e-mails requesting for further explanations.

In this article, I am adopting a different approach. I want you to think about certain issues and problems and see whether applying common sense will assist you in arriving at the logical conclusions.

Here we go:

Economic Stimulus

1. Right now, at this moment in time, is your government stimulating for growth or merely stimulating for consumption?

2. If it is the latter, does it make sense? The so-called experts say that “credit is the lifeblood of the economy”.

3. “Credit” to the banker means “loans” to you. “Loans” to the borrowers means “debts”. So why do you want to be in debt, just so as to consume?

4. You have a fixed income. Most people do. You are already committed to several debts – car loans, housing loans, financing for your children’s education. You have also your usual household expenses. So why do you want to borrow to consume on things or products that you do not really need or are necessary in your present state of finances?

5. Who gains by this excessive consumption?

6. Which is more critical, production or consumption?

7. Which, in the final analysis, ensures stability in the economy, employment and efficient allocation of resources and investments?

8. When exports are down and the economy has contracted, what are the implications?

Should we tighten our belts or consume and consume?

9. When exports are down, national revenue is down. Likewise, when your income is down, what do you normally do?

10. Which sectors of the economy will be stimulated and has the most benefit to the economy when we continue consuming, spending and borrowing?

Check out from the retail outlets, hypermarkets etc. and ascertain where are the majority of products produced? If they are mainly imported items, who benefits?

Too Big To Fail or Too Big To Sustain

11. When a bank through mismanagement fails, why should we use tax-payers monies to bail them out? Why are banks being treated differently?

12. If deposits are guaranteed by the government, why can’t the bank be liquidated, the old management sacked so that new investors and management can come in and revive the bank? After all, bank licenses are in great demand and few are granted. The new investors will re-capitalise the bank and revive it. Why the need for tax-payers’ monies to re-capitalise the bank?

13. When was the last time you heard a banker sent to jail for CBT? Corrupt bankers plunder in the billions and destroy economies. They get away time after time. Snatch thief is sent to prison and even whipped for stealing a few hundred ringgit.

14. Government linked companies use tax-payers monies to operate as opposed to private companies. In the case of the latter, when they fail, the investors bear the loss. Should we have tighter regulations and laws governing the management of government-linked companies over and above the laws governing private companies?

15. CEOs and board members are invariably political appointments. Should we allow this practice to continue?

Should the government inflate the stock market?

16. You have a bubble when you inflate, as in a balloon. When an asset is inflated, the price is artificially high. Thus, if a share price is inflated to RM10 when its actual value is RM1, why would anyone take the risk of buying such a share when sooner or later it will collapse?

17. Does it make sense for a government to use tax-payers’ monies to prop up the stock market when its values are artificially inflated?

18. Is this not misallocation of scarce resources?

19. Markets go up, markets go down and gamblers indulge in such activities with their eyes wide-open. So why should any government use tax-payers’ monies to sustain a market so as to prevent gamblers from suffering losses?

20. When a bubble has burst, what is the use of trying to reflate a burst bubble? In any event, physically can anyone reflate a burst balloon? When an asset’s actual value is RM1, does it make sense to maintain post-crisis, the artificial value of RM10 prior to the bursting of the bubble?

I want you to evaluate the RM67 billion stimulus in the light of the above questions.

Then ask yourself whether the policies make sense.

Finally, ask the RM67 billion question.

How did we fund this stimulus?

Where is the source for these funds?

Singapore - it's all about the money!

Why Is Lee Kuan Yew Strutting The Length and Breath of Malaysia? - By Matthias Chang (12/6/09)
By Matthias Chang
Friday, 12 June 2009 03:51

To many anti-colonial fighters of the third world, Lee Kuan Yew was contemptuously referred to as “ivory-skin Englishman”. He was and still is perceived as the lackey of the British power elites.

Malaysians can still recall the manner in which Lee Kuan Yew tried to wrest political power from Tunku and how he tried to supplant the MCA as the political party representing the Chinese. He was derisive of Tun Tan Siew Sin as not being a pure Chinese and as such not fit to represent the Chinese community.

However, the Chinese saw through his devious schemes and rejected emphatically PAP’s politics. Lee Kuan Yew thought he could out-maneuver Tunku and become the Prime Minister of Malaysia. But Tunku beat him at his own game and he was expelled from Malaysia.

Considering himself to be intellectually superior to Tunku, he could not accept that he was defeated so resoundingly by Tunku. He was devastated. When he announced that Singapore would be separated from Malaysia, he broke down uncontrollably. This was only to be expected as his dreams of being the Overlord of Malaysia, comprising of Peninsula Malaya, Sarawak and Sabah was shattered and he has to be content with being a bully of a city state!

Given such a traumatic experience, and possessing a vindictive disposition, it is a given that Lee Kuan Yew would harbour a secret agenda against Malaysia. And over the years, he has sowed and continue to sow discord among the races in Malaysia.

It was reported that one of the reasons for his recent visit to Malaysia is to find out how the Chinese are faring in Malaysia.

What arrogance!

The Chinese community in Malaysia has no need of a Lee Kuan Yew to meddle in its affairs or wellbeing. The Chinese community working with the other communities is more than able to look after themselves.

Why is there a need for such an elaborate programme – meetings with the prime minister, the deputy prime minister, an audience with the Agong, the Sultan of Perak and more meetings with other political leaders?

The picture of Lee Kuan Yew and the leaders of MCA displayed in the front page of Sin Chew Jit Poh says it all – why, may I add, was he wearing a traditional Chinese attire? And why were the leaders of MCA so willing to honour him when he had tried to topple Tun Tan Siew Sin at a critical juncture of our history?

I take the view that had Lee Kuan Yew succeeded in toppling Tun Tan Siew Sin, and PAP supplanted the MCA, social turmoil would have ensued and we as a nation would not have been able to achieve our present status.

No country is perfect and devoid of problems. We had our fair share, but we are better off without Lee Kuan Yew.

Malaysians must be vigilant. Lee Kuan Yew cannot be trusted and while Singapore is our neighbour and a member of ASEAN, we must never forget that Singapore has never ceased to dictate terms to Malaysia whenever she perceives Malaysia as being weak.

Do not forget the 1997 financial crisis and how Singapore treated us when we were in need.

Today, Singapore is reeling under the weight of the global financial tsunami, but Lee Kuan Yew is behaving as if Singapore has a bottomless vault of financial goodies, ever ready to invest in Malaysia as a favour.

We don’t need Singapore’s money!

Malaysia don’t need any favours from Singapore!

And Malaysians have no need for a Lee Kuan Yew telling us how to develop our country!

Pakatan Rakyat, people first, performance now!

By SPAnK

I am is a pretty foul mood right now. A bunch of incompetent nincompoops in Dell pissed me off. I was on the phone to check my order status and they passed me here and there and everywhere including to the receptionist a couple of times. It was like I was dealing with a Malaysian government agency. Oh how the last few fellas who got passed the phone got it from me. I feel sorry for them. The tirades were aimed at Dell the company and not them. Dell has certainly got to improve their service system. Right now, it is plain poor. But enough about Dell.

Cirque Du Soleil is a very popular modern circus troop from Canada. Their shows are like none others in the world. Very niche. You get awesomely nice backdrops and lighting, props, highly skilled acrobats, excellent excellent music and what not. Everything about Cirque Du Soleil is just top marks. But at the end of the day, they are still a circus.

After a short term of glory, Pakatan Rakyat has revealed to us that they are also ultimately a circus. Honeymoon is over for PKR, DAP and PAS. Should there even be one in politics in the very first place. And they all start to show their ugly insides now. Politics will always be politics. All 3 parties have different agendas and with some luck and skills, Anwar Ibrahim pulled a miracle right before March 2008 and got the 3 stooges together. I had always feared that this UHU Glue bond will not stick. It's not easy to form an Elephant Glue bond. But we were all hoping that this UHU Glue will last a little longer - at least 2 or 3 terms of general elections while BN wakes up.

2 to 3 terms? What? You expect me to lean towards PR all my life? Forget it. I support a 2 party system. I support democracy. I DO NOT support any political parties. And neither am I a member of any political party. Any party who is in power long enough will ultimately turn into UMNO of today. I assure you of that.

So what is PR up to? PAS openly declared that they 'may' want to work with UMNO and that means ditching PKR and DAP. DAP is now not happy and openly whacks PAS. PKR is not happy that the DAP Chief Minister of Penang appointed someone who is not a PKR man as the Seberang Prai Municipal Council President and boycotted the swearing-in ceremony. And there's much more. So, who in PR is happy with anyone? Can you please stand up.

And to top it up, all of the above have been blown out of proportions. Does these idiots actually belief that the likes of UMNO, MCA and MIC will not take these to the roof? Those farkers have been salivating and waiting. Media don't do them justice? How naive. How farking naive.

We should give PR more time? Fuck off! Why don't you ask your employers to give you more time to learn the company's products even after you've joined the company for more than a year. Why don't you ask your lecturer to be more lenient with you on your papers because you have just been transferred from another course. Wake up PR. You knew from 9 March 2008 that you have a steep learning curve. This is politics. Your opponents are not going to give you even a day of honeymoon. We rakyat on the other hand have been patient with you long enough.

It is bad that you lost a state. An entire martha farking state! The signs were there weeks before. But you were arrogant. You were cocky. You were over-confident. And you now can't get it back. You owe us the very people who voted you in - 1 blardie state. UMNO did it the wrong deceitful way. Oh how poor thing. Cry cry sob sob. I've had enough of that bullshit. You let UMNO succeed - and that's a fault in itself. Stop pointing fingers but look within. The fault ultimately lies within the hierarchy of Pakatan Rakyat. Period.

Question. Why are the PKR councilors allowed to boycott the ceremony? Anwar, please explain. These are your men.

Lim Guan Eng and Karpal Singh. Can't you solve party matters internally. Do you go round telling people that your daughter is dating a gangster? You solve your home problem in your house, don't you? Why air your blardie dirty linen to the world? Why whack your fellow component party in public. Aren't you just making matter worse. Isn't reconciliation been made a tad more difficult? Because you want to be transparent. Well, goodie then. Go live in a glass house. Farking lame excuse.

And PAS, PAS, PAS. The blardie black sheep of the family. You fools. You think the Chinese and Indians have decided to love your preaches? You think so don't you? Read and spell this out loud - F.O.O.L.S! The wind of change has been brought about because the rakyat is fed-up of UMNO and BN. Because the rakyat wants change. Because the rakyat wants a 2 party system. You happen to be the alternative - along with other 2. Try going on your own the next by-election and we shall see how you get blown to smithereens.

And let me tell you this. There's gonna be some smart alec out there who will claim that all these are just a political ploy by PR to let UMNO think that all is not well in PR, that PR in crumbling, that UMNO has succeeded and what not. Fuck you guys who think like this because if UMNO has been fooled, so has the rakyat. And no rakyat in his right mind should vote in an unstable government. Remember that, PR!

PKR, DAP and PAS. Shame on you. We appointed you to serve us rakyat. Not your personal or party agendas. I for one don't give a flying fuck about your problems. Do you know what most employers tell you when you have personal problems? Don't bring it to office. And I am telling you shallow politicians of Pakatan Rakyat to keep your problems to yourselves. Your employers, the rakyat, do not give a shit. Don't bring your problems to office.

PKR, DAP and PAS. For crying out loud, stop the quareling and bickerings and get back to work.

US President Barack Obama's keynote address in Egypt

CAIRO, June 4 — Below, the full text of President Barack Obama’s speech titled “A New Beginning”.

“I am honoured to be in the timeless city of Cairo, and to be hosted by two remarkable institutions. For over a thousand years, Al-Azhar has stood as a beacon of Islamic learning, and for over a century, Cairo University has been a source of Egypt’s advancement. Together, you represent the harmony between tradition and progress. I am grateful for your hospitality, and the hospitality of the people of Egypt. I am also proud to carry with me the goodwill of the American people, and a greeting of peace from Muslim communities in my country: assalaamualaykum.

We meet at a time of tension between the United States and Muslims around the world – tension rooted in historical forces that go beyond any current policy debate. The relationship between Islam and the West includes centuries of co-existence and cooperation, but also conflict and religious wars. More recently, tension has been fed by colonialism that denied rights and opportunities to many Muslims, and a Cold War in which Muslim-majority countries were too often treated as proxies without regard to their own aspirations. Moreover, the sweeping change brought by modernity and globalisation led many Muslims to view the West as hostile to the traditions of Islam.

Violent extremists have exploited these tensions in a small but potent minority of Muslims. The attacks of September 11th, 2001 and the continued efforts of these extremists to engage in violence against civilians has led some in my country to view Islam as inevitably hostile not only to America and Western countries, but also to human rights. This has bred more fear and mistrust.

So long as our relationship is defined by our differences, we will empower those who sow hatred rather than peace, and who promote conflict rather than the cooperation that can help all of our people achieve justice and prosperity. This cycle of suspicion and discord must end.

I have come here to seek a new beginning between the United States and Muslims around the world; one based upon mutual interest and mutual respect; and one based upon the truth that America and Islam are not exclusive, and need not be in competition. Instead, they overlap, and share common principles - principles of justice and progress; tolerance and the dignity of all human beings.

I do so recognising that change cannot happen overnight. No single speech can eradicate years of mistrust, nor can I answer in the time that I have all the complex questions that brought us to this point. But I am convinced that in order to move forward, we must say openly the things we hold in our hearts, and that too often are said only behind closed doors.

There must be a sustained effort to listen to each other; to learn from each other; to respect one another; and to seek common ground. As the Holy Koran tells us, “Be conscious of God and speak always the truth.” That is what I will try to do - to speak the truth as best I can, humbled by the task before us, and firm in my belief that the interests we share as human beings are far more powerful than the forces that drive us apart.

Part of this conviction is rooted in my own experience. I am a Christian, but my father came from a Kenyan family that includes generations of Muslims. As a boy, I spent several years in Indonesia and heard the call of the azaan at the break of dawn and the fall of dusk. As a young man, I worked in Chicago communities where many found dignity and peace in their Muslim faith.

As a student of history, I also know civilization’s debt to Islam. It was Islam – at places like Al-Azhar University - that carried the light of learning through so many centuries, paving the way for Europe’s Renaissance and Enlightenment. It was innovation in Muslim communities that developed the order of algebra; our magnetic compass and tools of navigation; our mastery of pens and printing; our understanding of how disease spreads and how it can be healed. Islamic culture has given us majestic arches and soaring spires; timeless poetry and cherished music; elegant calligraphy and places of peaceful contemplation. And throughout history, Islam has demonstrated through words and deeds the possibilities of religious tolerance and racial equality.

I know, too, that Islam has always been a part of America’s story. The first nation to recognise my country was Morocco. In signing the Treaty of Tripoli in 1796, our second President John Adams wrote, “The United States has in itself no character of enmity against the laws, religion or tranquility of Muslims.” And since our founding, American Muslims have enriched the United States.

They have fought in our wars, served in government, stood for civil rights, started businesses, taught at our Universities, excelled in our sports arenas, won Nobel Prizes, built our tallest building, and lit the Olympic Torch. And when the first Muslim-American was recently elected to Congress, he took the oath to defend our Constitution using the same Holy Koran that one of our Founding Fathers – Thomas Jefferson – kept in his personal library.

So I have known Islam on three continents before coming to the region where it was first revealed. That experience guides my conviction that partnership between America and Islam must be based on what Islam is, not what it isn’t. And I consider it part of my responsibility as President of the United States to fight against negative stereotypes of Islam wherever they appear.

But that same principle must apply to Muslim perceptions of America. Just as Muslims do not fit a crude stereotype, America is not the crude stereotype of a self-interested empire. The United States has been one of the greatest sources of progress that the world has ever known.

We were born out of revolution against an empire. We were founded upon the ideal that all are created equal, and we have shed blood and struggled for centuries to give meaning to those words – within our borders, and around the world. We are shaped by every culture, drawn from every end of the Earth, and dedicated to a simple concept: E pluribus unum: “Out of many, one.”

Much has been made of the fact that an African-American with the name Barack Hussein Obama could be elected President. But my personal story is not so unique. The dream of opportunity for all people has not come true for everyone in America, but its promise exists for all who come to our shores – that includes nearly seven million American Muslims in our country today who enjoy incomes and education that are higher than average.

Moreover, freedom in America is indivisible from the freedom to practice one’s religion. That is why there is a mosque in every state of our union, and over 1,200 mosques within our borders. That is why the US government has gone to court to protect the right of women and girls to wear the hijab, and to punish those who would deny it.

So let there be no doubt: Islam is a part of America. And I believe that America holds within her the truth that regardless of race, religion, or station in life, all of us share common aspirations - to live in peace and security; to get an education and to work with dignity; to love our families, our communities, and our God. These things we share. This is the hope of all humanity.

Of course, recognising our common humanity is only the beginning of our task. Words alone cannot meet the needs of our people. These needs will be met only if we act boldly in the years ahead; and if we understand that the challenges we face are shared, and our failure to meet them will hurt us all.

For we have learned from recent experience that when a financial system weakens in one country, prosperity is hurt everywhere. When a new flu infects one human being, all are at risk. When one nation pursues a nuclear weapon, the risk of nuclear attack rises for all nations. When violent extremists operate in one stretch of mountains, people are endangered across an ocean. And when innocents in Bosnia and Darfur are slaughtered, that is a stain on our collective conscience. That is what it means to share this world in the 21st century. That is the responsibility we have to one another as human beings.

This is a difficult responsibility to embrace. For human history has often been a record of nations and tribes subjugating one another to serve their own interests. Yet in this new age, such attitudes are self-defeating. Given our interdependence, any world order that elevates one nation or group of people over another will inevitably fail. So whatever we think of the past, we must not be prisoners of it. Our problems must be dealt with through partnership; progress must be shared.

That does not mean we should ignore sources of tension. Indeed, it suggests the opposite: we must face these tensions squarely. And so in that spirit, let me speak as clearly and plainly as I can about some specific issues that I believe we must finally confront together.

The first issue that we have to confront is violent extremism in all of its forms.

In Ankara, I made clear that America is not – and never will be – at war with Islam. We will, however, relentlessly confront violent extremists who pose a grave threat to our security. Because we reject the same thing that people of all faiths reject: the killing of innocent men, women, and children. And it is my first duty as President to protect the American people.

The situation in Afghanistan demonstrates America’s goals, and our need to work together. Over seven years ago, the United States pursued al Qaeda and the Taliban with broad international support. We did not go by choice, we went because of necessity.

I am aware that some question or justify the events of 9/11. But let us be clear: al Qaeda killed nearly 3,000 people on that day. The victims were innocent men, women and children from America and many other nations who had done nothing to harm anybody. And yet Al Qaeda chose to ruthlessly murder these people, claimed credit for the attack, and even now states their determination to kill on a massive scale. They have affiliates in many countries and are trying to expand their reach. These are not opinions to be debated; these are facts to be dealt with.

Make no mistake: we do not want to keep our troops in Afghanistan. We seek no military bases there. It is agonising for America to lose our young men and women. It is costly and politically difficult to continue this conflict. We would gladly bring every single one of our troops home if we could be confident that there were not violent extremists in Afghanistan and Pakistan determined to kill as many Americans as they possibly can. But that is not yet the case.

That’s why we’re partnering with a coalition of forty-six countries. And despite the costs involved, America’s commitment will not weaken. Indeed, none of us should tolerate these extremists. They have killed in many countries. They have killed people of different faiths – more than any other, they have killed Muslims. Their actions are irreconcilable with the rights of human beings, the progress of nations, and with Islam.

The Holy Koran teaches that whoever kills an innocent, it is as if he has killed all mankind; and whoever saves a person, it is as if he has saved all mankind. The enduring faith of over a billion people is so much bigger than the narrow hatred of a few. Islam is not part of the problem in combating violent extremism – it is an important part of promoting peace.

We also know that military power alone is not going to solve the problems in Afghanistan and Pakistan. That is why we plan to invest US$1.5 billion each year over the next five years to partner with Pakistanis to build schools and hospitals, roads and businesses, and hundreds of millions to help those who have been displaced. And that is why we are providing more than US$2.8 billion to help Afghans develop their economy and deliver services that people depend upon.

Let me also address the issue of Iraq. Unlike Afghanistan, Iraq was a war of choice that provoked strong differences in my country and around the world. Although I believe that the Iraqi people are ultimately better off without the tyranny of Saddam Hussein, I also believe that events in Iraq have reminded America of the need to use diplomacy and build international consensus to resolve our problems whenever possible. Indeed, we can recall the words of Thomas Jefferson, who said: “I hope that our wisdom will grow with our power, and teach us that the less we use our power the greater it will be.”

Today, America has a dual responsibility: to help Iraq forge a better future – and to leave Iraq to Iraqis. I have made it clear to the Iraqi people that we pursue no bases, and no claim on their territory or resources. Iraq’s sovereignty is its own. That is why I ordered the removal of our combat brigades by next August. That is why we will honour our agreement with Iraq’s democratically-elected government to remove combat troops from Iraqi cities by July, and to remove all our troops from Iraq by 2012. We will help Iraq train its Security Forces and develop its economy. But we will support a secure and united Iraq as a partner, and never as a patron.

And finally, just as America can never tolerate violence by extremists, we must never alter our principles. 9/11 was an enormous trauma to our country. The fear and anger that it provoked was understandable, but in some cases, it led us to act contrary to our ideals. We are taking concrete actions to change course. I have unequivocally prohibited the use of torture by the United States, and I have ordered the prison at Guantanamo Bay closed by early next year.

So America will defend itself respectful of the sovereignty of nations and the rule of law. And we will do so in partnership with Muslim communities which are also threatened. The sooner the extremists are isolated and unwelcome in Muslim communities, the sooner we will all be safer.

The second major source of tension that we need to discuss is the situation between Israelis, Palestinians and the Arab world.

America’s strong bonds with Israel are well known. This bond is unbreakable. It is based upon cultural and historical ties, and the recognition that the aspiration for a Jewish homeland is rooted in a tragic history that cannot be denied.

Around the world, the Jewish people were persecuted for centuries, and anti-Semitism in Europe culminated in an unprecedented Holocaust. Tomorrow, I will visit Buchenwald, which was part of a network of camps where Jews were enslaved, tortured, shot and gassed to death by the Third Reich. Six million Jews were killed – more than the entire Jewish population of Israel today.

Denying that fact is baseless, ignorant, and hateful. Threatening Israel with destruction – or repeating vile stereotypes about Jews – is deeply wrong, and only serves to evoke in the minds of Israelis this most painful of memories while preventing the peace that the people of this region deserve.

On the other hand, it is also undeniable that the Palestinian people – Muslims and Christians – have suffered in pursuit of a homeland. For more than sixty years they have endured the pain of dislocation. Many wait in refugee camps in the West Bank, Gaza, and neighbouring lands for a life of peace and security that they have never been able to lead. They endure the daily humiliations – large and small – that come with occupation. So let there be no doubt: the situation for the Palestinian people is intolerable. America will not turn our backs on the legitimate Palestinian aspiration for dignity, opportunity, and a state of their own.

For decades, there has been a stalemate: two peoples with legitimate aspirations, each with a painful history that makes compromise elusive. It is easy to point fingers – for Palestinians to point to the displacement brought by Israel’s founding, and for Israelis to point to the constant hostility and attacks throughout its history from within its borders as well as beyond. But if we see this conflict only from one side or the other, then we will be blind to the truth: the only resolution is for the aspirations of both sides to be met through two states, where Israelis and Palestinians each live in peace and security.

That is in Israel’s interest, Palestine’s interest, America’s interest, and the world’s interest. That is why I intend to personally pursue this outcome with all the patience that the task requires. The obligations that the parties have agreed to under the Road Map are clear. For peace to come, it is time for them – and all of us – to live up to our responsibilities.

Palestinians must abandon violence. Resistance through violence and killing is wrong and does not succeed. For centuries, black people in America suffered the lash of the whip as slaves and the humiliation of segregation. But it was not violence that won full and equal rights. It was a peaceful and determined insistence upon the ideals at the centre of America’s founding.

This same story can be told by people from South Africa to South Asia; from Eastern Europe to Indonesia. It’s a story with a simple truth: that violence is a dead end. It is a sign of neither courage nor power to shoot rockets at sleeping children, or to blow up old women on a bus. That is not how moral authority is claimed; that is how it is surrendered.

Now is the time for Palestinians to focus on what they can build. The Palestinian Authority must develop its capacity to govern, with institutions that serve the needs of its people. Hamas does have support among some Palestinians, but they also have responsibilities. To play a role in fulfilling Palestinian aspirations, and to unify the Palestinian people, Hamas must put an end to violence, recognise past agreements, and recognise Israel’s right to exist.

At the same time, Israelis must acknowledge that just as Israel’s right to exist cannot be denied, neither can Palestine’s. The United States does not accept the legitimacy of continued Israeli settlements. This construction violates previous agreements and undermines efforts to achieve peace. It is time for these settlements to stop.

Israel must also live up to its obligations to ensure that Palestinians can live, and work, and develop their society. And just as it devastates Palestinian families, the continuing humanitarian crisis in Gaza does not serve Israel’s security; neither does the continuing lack of opportunity in the West Bank. Progress in the daily lives of the Palestinian people must be part of a road to peace, and Israel must take concrete steps to enable such progress.

Finally, the Arab States must recognise that the Arab Peace Initiative was an important beginning, but not the end of their responsibilities. The Arab-Israeli conflict should no longer be used to distract the people of Arab nations from other problems. Instead, it must be a cause for action to help the Palestinian people develop the institutions that will sustain their state; to recognise Israel’s legitimacy; and to choose progress over a self-defeating focus on the past.

America will align our policies with those who pursue peace, and say in public what we say in private to Israelis and Palestinians and Arabs. We cannot impose peace. But privately, many Muslims recognise that Israel will not go away. Likewise, many Israelis recognise the need for a Palestinian state. It is time for us to act on what everyone knows to be true.

Too many tears have flowed. Too much blood has been shed. All of us have a responsibility to work for the day when the mothers of Israelis and Palestinians can see their children grow up without fear; when the Holy Land of three great faiths is the place of peace that God intended it to be; when Jerusalem is a secure and lasting home for Jews and Christians and Muslims, and a place for all of the children of Abraham to mingle peacefully together as in the story of Isra, when Moses, Jesus, and Mohammed (peace be upon them) joined in prayer.

The third source of tension is our shared interest in the rights and responsibilities of nations on nuclear weapons.

This issue has been a source of tension between the United States and the Islamic Republic of Iran. For many years, Iran has defined itself in part by its opposition to my country, and there is indeed a tumultuous history between us. In the middle of the Cold War, the United States played a role in the overthrow of a democratically-elected Iranian government.

Since the Islamic Revolution, Iran has played a role in acts of hostage-taking and violence against US troops and civilians. This history is well known. Rather than remain trapped in the past, I have made it clear to Iran’s leaders and people that my country is prepared to move forward. The question, now, is not what Iran is against, but rather what future it wants to build.

It will be hard to overcome decades of mistrust, but we will proceed with courage, rectitude and resolve. There will be many issues to discuss between our two countries, and we are willing to move forward without preconditions on the basis of mutual respect. But it is clear to all concerned that when it comes to nuclear weapons, we have reached a decisive point.

This is not simply about America’s interests. It is about preventing a nuclear arms race in the Middle East that could lead this region and the world down a hugely dangerous path.

I understand those who protest that some countries have weapons that others do not. No single nation should pick and choose which nations hold nuclear weapons.

That is why I strongly reaffirmed America’s commitment to seek a world in which no nations hold nuclear weapons. And any nation – including Iran – should have the right to access peaceful nuclear power if it complies with its responsibilities under the nuclear Non-Proliferation Treaty.

That commitment is at the core of the Treaty, and it must be kept for all who fully abide by it. And I am hopeful that all countries in the region can share in this goal.

The fourth issue that I will address is democracy.

I know there has been controversy about the promotion of democracy in recent years, and much of this controversy is connected to the war in Iraq. So let me be clear: no system of government can or should be imposed upon one nation by any other.

That does not lessen my commitment, however, to governments that reflect the will of the people. Each nation gives life to this principle in its own way, grounded in the traditions of its own people. America does not presume to know what is best for everyone, just as we would not presume to pick the outcome of a peaceful election.

But I do have an unyielding belief that all people yearn for certain things: the ability to speak your mind and have a say in how you are governed; confidence in the rule of law and the equal administration of justice; government that is transparent and doesn’t steal from the people; the freedom to live as you choose.

Those are not just American ideas, they are human rights, and that is why we will support them everywhere.

There is no straight line to realise this promise. But this much is clear: governments that protect these rights are ultimately more stable, successful and secure. Suppressing ideas never succeeds in making them go away.

America respects the right of all peaceful and law-abiding voices to be heard around the world, even if we disagree with them. And we will welcome all elected, peaceful governments - provided they govern with respect for all their people.

This last point is important because there are some who advocate for democracy only when they are out of power; once in power, they are ruthless in suppressing the rights of others. No matter where it takes hold, government of the people and by the people sets a single standard for all who hold power: you must maintain your power through consent, not coercion; you must respect the rights of minorities, and participate with a spirit of tolerance and compromise; you must place the interests of your people and the legitimate workings of the political process above your party. Without these ingredients, elections alone do not make true democracy.

The fifth issue that we must address together is religious freedom.

Islam has a proud tradition of tolerance. We see it in the history of Andalusia and Cordoba during the Inquisition. I saw it firsthand as a child in Indonesia, where devout Christians worshiped freely in an overwhelmingly Muslim country.

That is the spirit we need today. People in every country should be free to choose and live their faith based upon the persuasion of the mind, heart, and soul. This tolerance is essential for religion to thrive, but it is being challenged in many different ways.

Among some Muslims, there is a disturbing tendency to measure one’s own faith by the rejection of another’s. The richness of religious diversity must be upheld – whether it is for Maronites in Lebanon or the Copts in Egypt. And fault lines must be closed among Muslims as well, as the divisions between Sunni and Shia have led to tragic violence, particularly in Iraq.

Freedom of religion is central to the ability of peoples to live together. We must always examine the ways in which we protect it. For instance, in the United States, rules on charitable giving have made it harder for Muslims to fulfil their religious obligation. That is why I am committed to working with American Muslims to ensure that they can fulfil zakat.

Likewise, it is important for Western countries to avoid impeding Muslim citizens from practicing religion as they see fit – for instance, by dictating what clothes a Muslim woman should wear. We cannot disguise hostility towards any religion behind the pretence of liberalism.

Indeed, faith should bring us together. That is why we are forging service projects in America that bring together Christians, Muslims, and Jews.

That is why we welcome efforts like Saudi Arabian King Abdullah’s Interfaith dialogue and Turkey’s leadership in the Alliance of Civilizations. Around the world, we can turn dialogue into Interfaith service, so bridges between peoples lead to action – whether it is combating malaria in Africa, or providing relief after a natural disaster.

The sixth issue that I want to address is women’s rights.

I know there is debate about this issue. I reject the view of some in the West that a woman who chooses to cover her hair is somehow less equal, but I do believe that a woman who is denied an education is denied equality. And it is no coincidence that countries where women are well-educated are far more likely to be prosperous.

Now let me be clear: issues of women’s equality are by no means simply an issue for Islam. In Turkey, Pakistan, Bangladesh and Indonesia, we have seen Muslim-majority countries elect a woman to lead. Meanwhile, the struggle for women’s equality continues in many aspects of American life, and in countries around the world.

Our daughters can contribute just as much to society as our sons, and our common prosperity will be advanced by allowing all humanity – men and women – to reach their full potential. I do not believe that women must make the same choices as men in order to be equal, and I respect those women who choose to live their lives in traditional roles. But it should be their choice.

That is why the United States will partner with any Muslim-majority country to support expanded literacy for girls, and to help young women pursue employment through micro-financing that helps people live their dreams.

Finally, I want to discuss economic development and opportunity.

I know that for many, the face of globalisation is contradictory. The Internet and television can bring knowledge and information, but also offensive sexuality and mindless violence. Trade can bring new wealth and opportunities, but also huge disruptions and changing communities.

In all nations – including my own – this change can bring fear. Fear that because of modernity we will lose of control over our economic choices, our politics, and most importantly our identities - those things we most cherish about our communities, our families, our traditions, and our faith.

But I also know that human progress cannot be denied. There need not be contradiction between development and tradition. Countries like Japan and South Korea grew their economies while maintaining distinct cultures.

The same is true for the astonishing progress within Muslim-majority countries from Kuala Lumpur to Dubai. In ancient times and in our times, Muslim communities have been at the forefront of innovation and education.

This is important because no development strategy can be based only upon what comes out of the ground, nor can it be sustained while young people are out of work. Many Gulf States have enjoyed great wealth as a consequence of oil, and some are beginning to focus it on broader development. But all of us must recognise that education and innovation will be the currency of the 21st century, and in too many Muslim communities there remains underinvestment in these areas.

I am emphasising such investments within my country. And while America in the past has focused on oil and gas in this part of the world, we now seek a broader engagement.

On education, we will expand exchange programs, and increase scholarships, like the one that brought my father to America, while encouraging more Americans to study in Muslim communities. And we will match promising Muslim students with internships in America; invest in on-line learning for teachers and children around the world; and create a new online network, so a teenager in Kansas can communicate instantly with a teenager in Cairo.

On economic development, we will create a new corps of business volunteers to partner with counterparts in Muslim-majority countries. And I will host a Summit on Entrepreneurship this year to identify how we can deepen ties between business leaders, foundations and social entrepreneurs in the United States and Muslim communities around the world.

On science and technology, we will launch a new fund to support technological development in Muslim-majority countries, and to help transfer ideas to the marketplace so they can create jobs. We will open centres of scientific excellence in Africa, the Middle East and Southeast Asia, and appoint new Science Envoys to collaborate on programs that develop new sources of energy, create green jobs, digitise records, clean water, and grow new crops. And today I am announcing a new global effort with the Organisation of the Islamic Conference to eradicate polio. And we will also expand partnerships with Muslim communities to promote child and maternal health.

All these things must be done in partnership. Americans are ready to join with citizens and governments; community organisations, religious leaders, and businesses in Muslim communities around the world to help our people pursue a better life.

The issues that I have described will not be easy to address. But we have a responsibility to join together on behalf of the world we seek – a world where extremists no longer threaten our people, and American troops have come home; a world where Israelis and Palestinians are each secure in a state of their own, and nuclear energy is used for peaceful purposes; a world where governments serve their citizens, and the rights of all God’s children are respected. Those are mutual interests. That is the world we seek. But we can only achieve it together.

I know there are many – Muslim and non-Muslim – who question whether we can forge this new beginning. Some are eager to stoke the flames of division, and to stand in the way of progress. Some suggest that it isn’t worth the effort – that we are fated to disagree, and civilizations are doomed to clash. Many more are simply skeptical that real change can occur.

There is so much fear, so much mistrust. But if we choose to be bound by the past, we will never move forward. And I want to particularly say this to young people of every faith, in every country – you, more than anyone, have the ability to remake this world.

All of us share this world for but a brief moment in time. The question is whether we spend that time focused on what pushes us apart, or whether we commit ourselves to an effort - a sustained effort - to find common ground, to focus on the future we seek for our children, and to respect the dignity of all human beings.

It is easier to start wars than to end them. It is easier to blame others than to look inward; to see what is different about someone than to find the things we share. But we should choose the right path, not just the easy path.

There is also one rule that lies at the heart of every religion – that we do unto others as we would have them do unto us. This truth transcends nations and peoples - a belief that isn’t new; that isn’t black or white or brown; that isn’t Christian, or Muslim or Jew. It’s a belief that pulsed in the cradle of civilization, and that still beats in the heart of billions. It’s a faith in other people, and it’s what brought me here today.

We have the power to make the world we seek, but only if we have the courage to make a new beginning, keeping in mind what has been written.

The Holy Koran tells us, “O mankind! We have created you male and a female; and we have made you into nations and tribes so that you may know one another.”

The Talmud tells us: “The whole of the Torah is for the purpose of promoting peace.”

The Holy Bible tells us, “Blessed are the peacemakers, for they shall be called sons of God.”

The people of the world can live together in peace. We know that is God’s vision. Now, that must be our work here on Earth. Thank you. And may God’s peace be upon you.