Global Monetary Fisticuff

Globalization Effect

(1) The meltdown of global financial markets has left the world in crisis, with some of the most successful nations now haunted by financial instability, facing surged unemployment and country recession.

(2) The economic situation of countries which we have previously witnessed as one of the rapid economic development nations in the world such as Japan and South Korea, as well as new emerging nations such as Russia, China, India and Brazil are facing hiatus in their nation development.

(3) Our country Malaysia, being one of the nations under the developing and emerging economies, has also been severely affected by the present crisis, although we were not directly involved with the dealings that have led to this unsustainable situation.

(4) Such is the nature of globalization.

(5) The current world economic crisis was caused mainly by a combination of world macroeconomic imbalances and severe weaknesses in the US and Western financial system.

(6) Whilst many countries struggle with the current world financial crisis, many companies on the other hand, are in dire straits and may go bankrupt anytime.


Global Unemployment Surged

(7) In the past decade, many populations such as Poles, Latinos, and Chinese from rural areas immigrated voluntarily to other countries; many South Asians work in the Gulf with no resentment but one objective – to survive and earn a living.

(8) However, the sharp turn in the global economy recently sees the global economic meltdown hitting the contemporary world badly, causing many to lose their jobs.

(9) According to International Labor Organization’s (ILO) latest report, ILO revised upwards the worldwide unemployment projections from 210million to 239 million in 2009. ILO’s updated projections of working poverty reviewed approximately 200 million workers worldwide will join the ranks of people living on less than USD 2 per day.

(10) Many of them are working in multinational companies, both local and abroad.

(11) If they were laid off by their current company, the flow of remittances from rich nations to poor countries, which used to be quite resilient during past few economics crisis, will create another incessant impact and effect in the future. And this laid off will also bring a significant consequences and repercussion on the workforce in all labor market sectors worldwide, apart from social issues.

(12) If ILO claimed such number of unemployment representing the worst performance on record in terms of employment creation worldwide, how do we ensure that the employment losses and human hardship are under control? And especially since the depth, breadth and duration of the crisis are still uncertain. Inequality and poverty are still the main concerns of many countries.

(13) Depth and breadth of the financial crisis couldn’t be solved as they have affected all countries worldwide especially when the unemployment rate, imports and exports have each surged and dwindled tremendously over a short period.


Care for Macroeconomics

(14) We need to respond and react to the world crisis and press on the dimension of globalization. It is imperative for us to understand and realize the dimensions and cause of the problem.

(15) Unemployment, inequality and poverty rate has increased drastically due to the impact of the financial crisis, and due to the world’s developments being underpinned by ‘solid’ progress in banking & financial industry.

(16) Both political and economical analyses have to be carried out and executed. Otherwise, it is hard for us to restore growth on a strong footing. The study and revision of the relationships between nations, among nation, market and society, between globalization and de-globalization, in the aspect of issues or subjects concerned with people within society, and economics, politics, sociology and geography have to be taken to a more detailed level.

(17) If subprime crisis or the housing bubbles were the root cause of today’s economic and financial disaster, why don’t we study, examine and revise our past policies?

(18) If efficient-markets hypothesis (EMH) model, an economic model applied and practiced in the financial industry especially in US and Europe for the past 30 years, has crashed and brought us to the present state of crisis, how do we restore and reform the financial situation worldwide? We hope to take an econometric approach to the problems of the current financial disasters in order to reveal more about the cause, as EMH has been applied for the past 30 years.

(19) If Dynamic stochastic general equilibrium (DSGE) models helped guide deliberations at several central banks, shall each country study and examine the models then?


De-globalize in a Globalized World?

(20) Fiscal policies and public policies that attempt to respond to the crisis so far have contributed little to the world, as global monetary issues have been bombarded after the subprime crisis. How regulators and politicians rally the disorganized, imbalance and unhealthy financial system, are doubtful and vague now. We need to reexamine public and fiscal policies we have been implementing for so long, to identify new short and long term policies.

(21) Early this month, the hospital industry of USA agreed to accept a cut of $155 billion in their expected revenue, after meeting with the country’s vice president Joseph Biden. Will de-globalization ease the present dire financial crisis?

(22) G8 summit meeting in Italy early this month declared: “Social and employment policies are a crucial pillar in the context of a new global framework”. What then are solutions to address human dimension of this crisis? How about the effects, impacts, and burden of the unremunerated work, which is particularly headed by women? Will they bring any positive results?

Imponderable Future

(23) We are facing an imponderable future. This uncertainty ‘encourages’ those who have saving to not commit to new capital projects. Subprime crisis deflated the housing bubbles. Does that mean we have previously ignored the control of housing properties, and let the prices boom to the likings of property tycoons? Is free market really free? How do we safeguard the financial stability worldwide? Do we need to switch our gears now?

(24) The world is actually engaged in fisticuffs now. Not a boxing-match in boxing ring, but rather the fiscal policies worldwide, in each nation and between nations. Housing bubbles deflated; banking and financial systems crashed. We have many renowned economists, and none of them is telling us what to do next. Nobody can envisage the consequences of the crisis, and nobody has the idea how to fix the rusty financial system.

Note: This article can also be found in Hewo.com BloggerStation.

关注G20

(1)举世瞩目的二十国集团（G20）峰会在伦敦落幕后，北约首脑峰会（NATO）陆续在德国和法国举行。前者是为了促进世界经济稳定和持续增长而成立；后者则是为了维护军事政治地位而设。

(2)许多国家希望通过二十国集团峰会获得实质上的成果，然而G20峰会成员国领导人在峰会开始前持有太多的分歧。美英法德四国在财政刺激与加强金融监管方面分歧巨大、中国等新兴市场希望拥有更大的话语权。法国总统萨科齐更表态若峰会没有达致实质的成果就要退出。

(3)二十国集团峰会由19个国家和欧盟组成，这占据了世界总人口的三分之二，而G20峰会的国内生产总值（GDP）也约占全世界的85%。身为普通市民的我像许多人一样，担心各成员国之间的分歧在峰会结束后，依然无法为已经遭遇严峻挑战的世界经济取得一个实质性的进展和成果。

(4)然而可喜的是，峰会在有游行示威、争吵纷争、巨大分歧中，取得了欣慰的成果。

(5)这次的峰会不如去年于华盛顿举办的峰会，仅通过共同宣言后，各成员国领导人纷纷打道回府，而是在建立世界新秩序方面迈出了至今最大的一步。

(6)峰会结束后，最鼓舞人心的是国际货币基金组织（IMF）的紧急融资能力跃升3倍以上。IMF的紧急融资能力从2500亿美元增到7500亿美元，再加上2500亿美元的特别提款权（Special Drawing Rights），IMF至今共有1万亿美元的可用资金。这1万亿美元的可用资金将使国际货币基金组织更有能力协助许多处于极度危机中的国家。

(7)除了为国际货币基金增资外，峰会也采取货币政策拯救全球经济，并加强金融监管、反对贸易保护主义以及促进全球贸易和打击避税天堂（Tax Heaven）。

(8)在此想进一步阐明避税天堂：若一个国家或地区被列入避税天堂的“黑名单”中，表示这个国家或地区是以非常优惠的税收政策吸引外国公司和公民在当地注册公司。此外，它们在税收、洗钱和金融安全方面给予的合作度也不高，这将严重损害国际金融体系的稳定。因此，峰会各成员国一致通过，将惩罚那些被列入避税天堂黑名单的国家和地区。很不幸的我国的纳闽岛也不小心被列入避税天堂“黑名单”里。

(9)虽然峰会最大的受惠者是国际货币基金组织，但是通过注资和峰会成果，G20峰会其他成员国将扩大其世界话语权和加强金融监管的影响力。国际金融机构和新兴市场等国家在世界经济舞台上也将发挥更大的作用；赋予中国等新兴市场更大的世界经济管理权也让这些国家在世界经济的影响力大大提升。而美国的一哥地位和世界中心地位也将随之减弱。

(10)自从美国次级房贷危机全面爆发以来，世界各国皆措手不及，纷纷惨遭全球金融风暴的袭 击。虽然各国政府努力采取措施减弱经济衰退、积极应对各种金融危机，然而随着危机不断升级并延续蔓延，寻求一条可行的复苏之路似乎遥不可及。我想，虽然二十国集团峰会的成果放缓了危机蔓延的机率；但是若不把这场始于银行与金融体系的风暴的根本性问题铲除，若不重振处于奄奄一息的银行和金融机构，G20峰会的成果不是釜底抽薪，只是扬汤止沸！

Stumble or Tumble?

(1)The world has more bourgeois today than 20 years ago due to the rise of the new emerging markets in the world. The rise of the bourgeois or middle class has changed the world and its economy.

(2)Who are the bourgeois? Bourgeois are neither the rich nor the poor; neither do they have enough money to escape the struggles for existence nor living from hand to mouth. Bourgeois vary hugely in terms of their background, education, profession and income. If you have around one third additional income left from discretionary expenditure after taking away basic necessity expenses, you are considered a bourgeois.

(3)Before recession, bourgeois are happy people. They are keen to invest in new products and new technologies, invest in human capital and educations, invest in new homes and shares, invest in commodity goods and busy with their exports and trading businesses around the globe. Bourgeois have flourished in places and nations that have opened up to the global economy such as the eastern seaboard of China, metropolitan Brazil, and southern India.

(4)From East Asia to Southern Asia, from East Europe to Southern America, from Southeast Asia to West Asia to Africa, from West Europe to North America, Bourgeois are one of the major expenditure contributors to the global economy.

(5)As new emerging markets offer cheaper labor cost, cheaper manufacturing cost, cheaper raw materials and cheaper commodities whilst rich nations are busy generating more and more sophisticated finance, these new emerging markets thus surged where the boom is powered by the rich world demand.

(6) Global recession hits the developing world especially the new-emerging markets the most as these markets depend on trade for economic growth. The World Bank expects the world economy to continue shrinking to its fullest this year for the first time since the 1929 Global Recession. The shrunk economy will consequently shape the buying power which the world trade is expected to fall at the fastest rate. In its latest release on March 11, China declares the country’s exports falling 26% compared to a year ago. China, one of the ‘Super-Star’ for the new-emerging markets has been hit the hardest, despite a $586 Billion stimulus package. All the famous four new-emerging markets, namely China, India, Brazil and Russia now share the same grief too.

(7)Will this worsen the recession? Will the global recession halt the rise of new-emerging markets? The answer to both questions is yes, it will.

(8) From subprime crisis to global financial crisis, the world economy has been destroyed. The US subprime bubble has caused the world to sink into recession. Most of the new-emerging markets have been badly hurt by the global financial crisis as the boom of these countries was driven largely by exports to rich nations like the US. Today, we have witnessed not only a harsh economic slowdown, but also more unemployment across the world, more supply than demand, lesser expenditure, and more social unrest.

(9)210million people are estimated to be unemployed by end of this year according to estimation by International Labor Organization (ILO) and Organisation for Economic Co-operation & Development (OECD). ILO estimates at least an additional 7.2million Asians will become jobless in 2009, an increase of 0.3% from 2008. ILO also forecasts at least 97million or in the worst scenario, 113million Asians will become jobless this year.

(10)Bear in mind as well that the grim news to job losses also signifies: job-lost, wage-freezes, job-sharing, and enforced holiday periods.

(11)And with all these happenings, these new-emerging markets and their people – the bourgeois, are now under a greater threat. They invested heavily when they started their import-export businesses. They invested in properties before the subprime bubble deflated. They created more job opportunities to the nation, and they spent modestly on their annual holidays. However, the global financial crisis has now led the exports of new economies to developed nations to either decline or come to a grinding halt. Unemployment rate now surges drastically. Wealth has been diminished by falling assets prices, and is further hurt by the credit crunch. The emerging economies are seriously at risk now. And Dubai, being one of the new-emerging nations from the Middle-East, is already in trouble!

(12)The new-emerging markets need time to recover from the global recession. These new-emerging economies need to create internal demand within its nations. There are more than 2billion bourgeois in the world who need to find ways to get themselves out of the recession. If they fail to do so, they will sink back into poverty. A lot more negative impacts can be anticipated, and which further elaboration will result in a separate lengthy article all together. In short, the recession this time around is extremely volatile. It can turn out to be a small “stumble” for the bourgeois, or it could caused them tumbling down completely if the right measures are not taken or not taken fast enough.

(Article also available in Hewo.com BloggerStation.)

Stagger or Steady?

(1) Our Malaysian Human Resources Minister declares that more than 25,000 Malaysian have registered as jobless in the ministry. The unemployment rate in Malaysia is predicted to increase between 4% - 4.5% this year, which means at least an additional of 200,000 to 400,000 Malaysia could be either retrenched, or jobless right after they obtained their degrees from college or university.

(2) The recent RM60 Billion mini-Budget announced by the Malaysian Government is aimed at four diverse areas: to increase the country’s productivity and competitiveness; to reduce the grief lies in the plight of jobless; to avert the price increases of necessities; and to obtain a better future for the country.

(3) What concern all Malaysians now are – does this RM60 billion help?

(4) Malaysia’s Deputy Prime Minister and Finance Minister Datuk Seri Najib Razak said that the RM60 billion mini-budget is not a “silver bullet” but rather a tool to protect the people from retrenchment and to ensure the nation’s continuous economic activity amidst the global economic downturn.

(5) As a Malaysian, I welcome decisions and policies coming from our Country Leaders.

(6) Coupons for daily consumables are more consumer-friendly than subsidies. Such incentive will increase the domestic demand and thus curtails the gap between supply and demand in the market. This approach is also more direct to the Rakyat (Malaysian) and can be distributed more evenly, thereby generating more cash flows within the markets.

(7) Small and Medium Enterprises (SMEs) in Malaysia, having accounted for 99.2% of our total business establishments and created 32% of the nation’s GDP and 19% of exports, are employing 5.6 million of the work force today. The Malaysian Government should therefore help the SMEs establish their competitive advantages in this global economic downturn by waiving more taxes so that they are competitive enough to compete with other SMEs or giant companies worldwide.

(8) The RM2billion SMA Assistance Guarantee Scheme is a step towards the right direction; however, expediting the process for funds and grants must be given utmost priority. The Government’s stimulus package providing such financial assistance to Malaysian businesses must be enforced with a sense of emergency. More and easy access to funds and grants are crucial at such trying times but slow in delivery system will definitely fail the well-intentioned stimulus plan.

(9) New channels of trading activity should now be explored. One significant consideration on the current market is the growing number of internet users and mobile subscribers. Borderless trading activities or global markets are easily available and accessible within just a click via ICT. Conventional businesses on the other hand will face limitations in this globalization era.

(10) Besides, Malaysia should optimize one of our important resources – tourism, on tackling the effect of crisis where supply now exceeds demand as exports have declined due to deteriorating demand from rich nations. As lesser exports are anticipated, why not look into bringing in more foreigners to spend their holidays in Malaysia instead? Malaysia must not forget our plentiful tourist attractions and fully-utilizing them. Monetary benefits given to travel agencies who are able to attract more foreigners for holidays in Malaysia will certainly boost the country’s market demand.

(11) Easy loan and grants to Malaysian women. 47% of the total work force in Malaysia is women whereas 16% out of the 548,267 SMEs in Malaysia are owned by women. Providing easy loan and grants to Malaysian women for their small scale business or home business to medium scale enterprises allow them to contribute to the recovery of the nation’s economic crisis. Women having been nurtured in a developing country are gaining more recognition for their substantial involvement in diverse businesses in Malaysia (besides their prominent spending capacity). As our higher education institutions are churning out more highly educated women into the workforce for Malaysia, providing financial assistance such as loan and grants for business purpose are much welcome.

(12) Notwithstanding the challenges Malaysia has to face, paying attention to the voice of affected segments in the country can turn out to be valuable turning points for Malaysia. A strong understanding of needs and right implementation at the right areas will see Malaysia walk out of this dark crisis tunnel. And whether staggering or walking out at a steady pace, Malaysians and especially the Country Leaders have to start walking and picking up the pace.

(Article also available in Hewo.com BloggerStation.)