econsmalaysia.blogspot.com

Just discovered econsmalaysia.blogspot.com. It had a very good post named A FAQ On Malaysian Government Debt.
I am very much anti-BN but I really had difficulty stomaching Pakatan politicized attack on Malaysian public Debt and deficits. They went too far with their household comparison and omitting the fact that public debt for other countries was growing pretty fast in the last 5 years also.


My comments on his post are reproduced here:
Pardon me a blue collar worker for adding a few grain of under informed opinions hereon what most Malaysian Debt/Deficit Doomsayer choose not to touch:

1) Malaysian Government don't print money. They can only borrow money from Bank Negara Malaysia(BNM) or other institutions(private/public)by issuing government securities(MGS). As a result, the interest on MGS will also cause the national debt to grow.

2) Pakatan doesn't mentioned that other countries governments also rollover their debt consistently. And it is one of the major contributing factors to why most countries saw their gov debt rose steeply in recent years.(Compound interest curve become pretty scary after the 20th year)

3) Gov deficit(public spending) represents a surplus for the private sector. Singapore has a public debt of 102.1% of GDP. Singapore public debt are used to keep public transport affordable, keep the street safe and other commonwealth functions. Malaysian gov deficit are spent into the pockets of cronies. We should be panicking because of corruption and not debt levels per se.

4) Public(Gov) money vs Private(Banks) money? Both increases their liabilities(leverages) to supply the economy with money. But not enough panicky weight has been placed on the level of private debt(mortgage and vehicle). As much as we lament irresponsible gov borrowings, the private banking credits(created out of nothing too) are as culpable in messing up the economy. Both puts money into businessmen to create oligarchies/monopolies and very little are trickled down. Both also pushes the normal folks into debt choke-hold. Bottom line Najib's government needs to face the electorate but CIMB answers to the rich elites only.

5)CM Lim Guan Eng mentioned briefly about private debt but fell short of implementing anything concrete that can curb excessive land speculation in Penang.

6) Malaysia the next Greece? Only if Malaysian foreign debts grow out of proportion and our government cease to be sovereign state that can create its own credit money. Actually, we do have a decent trade surplus by today's international standard.



IMHO instead of worrying about debt level, our main problem is political and legal. How to keep our sovereignty? Meaning what are we going to about practical issues:

1)prevent escalation of an artificial crisis where predatory private individuals/entities (foreign or local) can buy up Malaysia for cents on the ringgit?

2)If SHTF how are we going to repudiate some of the odious debts incurred by corrupt politicians?

3)Gotta to admit that huge amount of the loots had already been illicitly transferred out of the country. So can we come up with some contingencies to claw back some of these funds? Can we find some way to neutralized the value of these illicit Ringgits overseas?

4) Seems that half of our EPF had also been drawn down by our current gov(they seem to prefer borrowing form EPF than BNM). It is not ideal but we have to face the fact that EPF is not going to be fully funded for future retirees. But we can nonetheless find some way to manage the funds flow by not compromising on the retirees or the working public too much.

5) And most importantly when the hell are we going to vote out the crooks in parliaments?(added later)