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2011-04-18T17:26:00.000+08:00

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2010-09-01T12:24:00.000+08:00

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Apa Itu Krisis Sub Prima ?

2009-03-05T22:59:00.003+08:00

Krisis sub prima berlaku apabila bank tidak lagi menggunakan sistem konvensional (riba jahiliyyah) yang biasa mereka gunakan selama ini. Kita panggilnya sebagai sistem konvensional tradisional.

Dalam sistem konvensional yang tradisional, apabila anda meminjam untuk membeli sebiji rumah, rumah itu adalah cagarannya. Bila anda gagal membayar ansuran rumah tersebut, bank akan tarik rumah anda dan rumah anda akan dilelong.

Masalah dalam sistem konvensional tradisional ini adalah, bank mempunyai had tertentu untuk memberikan pinjaman kerana pinjaman yang mereka boleh beri adalah bergantung kepada jumlah deposit yang mereka dapat.

Biasalah, orang bisnes selalu nak untung lebih. Dah untung 1 bilion mahu untung 10 bilion.

Jadi, institusi kewangan sebegini mencari jalan untuk mendapatkan sumber kewangan yang lebih untuk membolehkan mereka memberikan lebih banyak hutang dan seterusnya membuat lebih untung dengan riba’.

Akhirnya mereka berpakat sesama mereka untuk membentuk satu dana besar dimana mereka menjual cagaran-cagaran tersebut dalam pasaran hutang atau bond market.

Mortgage bond market ini setelah dipakejkan oleh bank-bank pelaburan (investment bank), pula dibeli oleh pelabur-pelabur seperti bank lain, syarikat insurans, pengurus dana pencen, saham amanah dan sebagainya.

Pelabur-pelabur ini yakin dengan bond-bond yang mereka beli kerana dalam pasaran bond ada rating agency yang memberikan gred-gred tertentu kepada bond-bond ini. Jadi, mereka ada keyakinan yang bond yang mereka beli itu nanti akan memberikan pulangan apabila tempohnya matang nanti.

Apabila bank mula mendapat wang tambahan dari dana baru ini untuk dipinjamkan, maka mereka juga mula memberikan hutang kepada individu-individu yang tidak layak untuk meminjam dalam keadaan biasa. Maka ia dipanggil pinjaman sub prima. Selain sub prima perumahan, ada juga sub prima kad kredit.

Di Amerika, dianggarkan 25% daripada penduduknya tidak layak meminjam dengan sistem konvensional tradisional.

Jumlah pinjaman sub prima ini pula pada Mac 2007 dianggarkan bernilai USD 1.3 trilion (RM 4.4 trilion)

Apabila institusi kewangan di Amerika mengamalkan pinjaman sebegini, dengan faktor kejatuhan pasaran hartanah di Amerika, akhirnya para peminjam ini mula gagal membayar hutang mereka.

Apabila peminjam-peminjam ini mula gagal membayar hutang, maka pelabur yang membeli bond-bond sub prima ini mula kerugian kerana keuntungan yang mereka jangka akan diperolehi tidak ada.

Apabila para pelabur kerugian, maka pasaran bond sub prima di Amerika pun mula bermasalah. Apabila bermasalah, bank mula tidak mendapat sumber baru untuk memberikan lebih banyak hutang. Apabila hutang baru tidak boleh diberikan, maka pembeli rumah tidak dapat menjual rumah mereka kerana pembeli baru tidak boleh berhutang dan seterusnya.

Para pelabur pasaran bond ini habis duit, untung yang dijanjikan kepada pelanggan (macam di Malaysia ni yang bayangkan KWSP, ASB, saham amanah, insurans dan sebagainya semua rugi) tiada.

Bank dan institusi kewangan habis duit, sebab orang yang gagal bayar hutang (defaulter) jauh lebih ramai dari yang berjaya bayar hutang habis. (Sedangkan dalam keadaan biasa, mereka perlu kawal jumlah defaulter biar tak terlalu ramai)

Spekulator / flipper dalam pasaran hartanah Amerika habis duit, sebab dah terbeli rumah pada harga tinggi, nilai rumah yang sebenar adalah rendah, dan rumah tersebut tidak dapat dijual dengan pelbagai sebab antaranya pembeli baru tidak dapat buat hutang dari bank. (Sebab tu adalah lebih baik melabur dalam pasaran hartanah kerana cashflow, dan bukan untuk jual balik dengan harga lebih tinggi semata-mata)

Itu belum campur dengan kerugian para pelabur yang melabur dalam syarikat-syarikat yang terjejas secara langsung dengan krisis krediti ini. Bayangkan kerugian para pelabur Lehman Brothers yang muflis dalam krisis ini.

Maka akhirnya ia membentuk satu chain reaction.

Dan chain reactionnya adalah sangat besar.

Inilah yang dinamakan krisis sub prima. Harapnya saya telah memudahkan anda untuk faham krisis ini tanpa terlalu banyak menggunakan istilah kewangan yang susah nak faham.

Sumber Ketik Sini

Skrg ni sana-sini orang cakap pasai masalah ekonomi..aku suka amek tau benda ni jadi kongsi dgn kawan2 apa sebenaqnya yang jadi@lebih kurang apa yang jadi sekarang..

Aku rasa penerangan di atas cukup2 @ agak ringkas untuk kita semua faham kan...Jadilah masyarakat yang berilmu...elakkan ditipu oleh kerajaan @ pembangkang...WahahAhahah

U.S. Economy: Payrolls Post Biggest Annual Decline Since 1945

2009-01-10T00:29:00.003+08:00

By Shobhana Chandra

Jan. 9 (Bloomberg) -- The U.S. lost more jobs in 2008 than in any year since 1945 as employers fired another 524,000 people in December, indicating a free-fall in the economy just days before President-elect Barack Obama takes office.

“Consumers are now going to get more and more scared at the prospect of losing their job,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts. Obama’s proposed fiscal stimulus “needs to be big, needs to be bold, needs to be swift. If they can do something quickly we can limit the hemorrhage by mid-year.”

The Labor Department reported that the nation lost 2.589 million jobs in 2008, just shy of the 2.75 million decline at the end of World War II. The unemployment rate climbed more than economists forecast, to 7.2 percent in December, the highest level in almost 16 years.

Today’s figures will intensify pressure on U.S. lawmakers to act quickly on Obama’s recovery program, which may exceed $775 billion and aims to save or create 3 million jobs. They also underscore the urgency of the Federal Reserve’s $200 billion initiative to restart consumer financing markets that’s scheduled to begin next month.

The outlook for jobs this year is no brighter as retailers from Wal-Mart Stores Inc. to Macy’s Inc. slash profit forecasts and manufacturers including Alcoa Inc. cut output and staff.

Stocks, Treasuries

Stock-index futures rose initially, before equities fell in regular trading. Treasuries were little changed, while the dollar rose on relief among some investors that the payroll drop wasn’t bigger. The Standard & Poor’s 500 Stock Index fell 1.6 percent to 894.86 at 10:23 a.m. in New York. Benchmark 10-year note yields were at 2.43 percent. The dollar rose 1 percent to $1.3568 per euro.

Payrolls were forecast to drop 525,000 after a previously reported 533,000 decline in November, according to the median estimate of 73 economists surveyed by Bloomberg News. Revisions subtracted 154,000 from payroll figures previously reported for November and October.

The jobless rate was projected to jump to 7 percent from a previously reported 6.7 percent in November.

Losses last month were widespread, with manufacturers, builders, retailers and temporary-help agencies axing positions.

Companies are also cutting back employees’ working hours in an effort to limit labor costs. The average work week shrank to a record-low 33.3 hours, today’s figures showed.

‘Full Throttle’

“This was the most rapid deterioration in the labor market over a six-month period since 1975,” said Michael Darda, chief economist at MKM Partners LP in Greenwich, Connecticut. “Policy makers will go full throttle” until “the labor market starts to turn,” he said.

Obama is pressing for a stimulus plan including tax cuts and spending on everything from roads and schools to the energy network. Yesterday he called for “dramatic action as soon as possible” to help pull the world’s largest economy out of a slump that’s in its second year. “If nothing is done, this recession could linger for years,” he said in Fairfax, Virginia.

Fed policy makers are planning to start a new program next month aimed at shoring up the market for financing car purchases, credit card loans and student debt. Officials announced the effort in November at the same time as initiating a $600 billion program to purchase debt issued or backed by government-chartered housing finance companies.

Fed’s Response

The central bank has already lowered its benchmark interest rate to zero to 0.25 percent, aiming to bring down borrowing costs. Officials’ main focus is now taking unorthodox steps termed by analysts as quantitative easing to boost the supply of credit in the economy.

“For policy makers, there is a message” in today’s figures, said Kurt Karl, chief U.S. economist at Swiss Re in New York. “It obviously gives a big boost to Obama’s quite large stimulus package. The Fed will continue to do quantitative easing with rates so low.”

Obama’s economic aides and lawmakers are also discussing ways to deploy the second half of the Treasury’s $700 billion financial-rescue fund. House Financial Services Committee Chairman Barney Frank favors using some funds to stem mortgage foreclosures, aid issuers of municipal bonds and help homebuyers.

With today’s report, the Labor Department revised figures from its household survey, which includes the unemployment rate, going back five years. Benchmark revisions to the payroll figures will be announced in February.

12th Decline

Last month’s decline was the 12th consecutive drop in payrolls. The economy created 1.1 million jobs in 2007.

During President George W. Bush’s two terms in office, the economy generated a net 3 million jobs, compared with 22.8 million created during the eight years when Bill Clinton was president.

Bush leaves office with unemployment at 7.2 percent, compared with the 4.2 percent rate he inherited from Clinton in January 2001. Unemployment was 7.3 percent when Clinton took office in January 1993, the last month that the jobless rate was higher than now.

Workers’ average hourly wages rose 5 cents, or 0.3 percent, to $18.36 from the prior month. Hourly earnings were 3.7 percent higher than December 2007. Economists surveyed by Bloomberg had forecast a 0.2 percent increase from November and a 3.6 percent gain for the 12-month period.

Today’s report showed factory payrolls shrank 149,000, the biggest drop since August 2001. Economists had forecast a drop of 100,000. The decrease included a loss of 21,400 jobs in auto and parts industries. Manufacturing, which makes up 12 percent of the economy, shrank in December at the fastest pace in 28 years, Institute for Supply Management figures showed.

Services Industries

Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 273,000 workers. Retail employment dropped by 66,600. Government payrolls increased by 7,000 after falling 3,000 the prior month. Builders fired 101,000. Financial firms reduced payrolls by 14,000.

Analysts said the economy may be in danger of a reinforcing cycle of rising unemployment and declining household spending, what policy makers call a negative feedback loop, which is difficult to snap once it’s begun.

Fed staff last month cut projections for gross domestic product and the job market, stating the unemployment rate was “likely to rise significantly into 2010,” according to minutes of policy makers’ December meeting.

Wal-Mart, the world’s biggest retail chain, yesterday said fourth-quarter profit will miss its earlier forecasts after sales rose less than analysts anticipated. Macy’s said December revenue slipped 4 percent and announced it would close 11 stores.

Retailing Losses

Sales at stores open at least a year dropped 2.2 percent in the last two month months of 2008, the biggest holiday-season decline since the International Council of Shopping Centers started keeping records in 1970, the group said yesterday.

“These are extraordinary times, requiring speed and decisiveness to address the current economic downturn,” Klaus Kleinfeld, chief executive officer of Alcoa, said in a Jan. 6 statement announcing 13,500 job cuts worldwide. The world’s largest aluminum producer said it will trim an additional 1,700 contractor positions and froze hiring and salaries in some areas.

Some companies have taken other steps to lower costs. Caterpillar Inc., the world’s largest maker of construction equipment, will put 814 workers on an “indefinite” layoff, shipper FedEx Corp. cut the pay of Chief Executive Officer Fred Smith and other employees, and auto-parts supplier Visteon Corp. said it will trim the workweek and some salaries.

Sumber ketik sini

Semlm Non-Farm Employment Change macam mana aku boleh terlepas pandang..Tp mmg biasa aku tak masuk post kalau NFP....Result kt atas tu akan effect ekonomi US lagi(Sapa2 masuk kelas En Abu Yamin mesti tau benda ni kan.Dia penah cerita mcm mana Unemployment Rate akan beri kesan kt sesebuah negara) Pastu aku rasa saham2 akan jatuh balik sementara nk tggu USA umum pakej rangsangan baru lepas depa tolak rancangan sebelum ni kan...Dan bila saham2 US jatuh secara tak langsung akan effect saham2 kt tmpt lain...Lepas tu ketakutan kemelesetan ekonomi bakal terjadi akan bertambah2 laaaa....Tu pendapat aku saja pasai aku bab-bab fundamental analysis ni tak pandai sgt...Technical Analysis ok la sikit2..Lgpun aku seorang scalper....Indikator main peranan lebih penting kt aku...

Btw aku bukan layan saham pun...aku layan...naik aku masuk post...turun aku masuk jugak...HaHaAhAhAh...AKu rasa lepas ni nak buat jurnal aku...'Indikator ku sayang' yg dah aku cuba & blend2kan dekat setahun dah tunjuk hasil amat2 bagus..Post2 amat2 menghijau...Nnti aku dah sedia aku share kt sini...

Bursa dunia melonjak.....

2009-01-06T12:27:00.002+08:00

Bursa dunia melonjak
PELABUR tempatan meneliti pergerakan saham Bursa
Malaysia di salah sebuah bank tempatan di Kuala Lumpur, semalam. - AP
KUALA
LUMPUR 5 Jan. - Bursa saham dunia melonjak tinggi hari ini dengan pasaran di
Tokyo mencapai paras tertinggi hampir dua bulan apabila para pelabur percaya
ekonomi Amerika Syarikat (AS) akan kembali pulih.
Jangkaan pengumuman pelan
rangsangan ekonomi yang bakal memulihkan ekonomi negara kuasa dunia oleh
Presiden baru AS, Barack Obama, menyaksikan peningkatan tinggi pasaran Wall
Street Jumaat lalu, demikian menurut laporan AFP yang dipetik di
sini.
Perkembangan itu telah memberikan kesannya kepada Bursa Malaysia yang
ditutup 26.30 mata atau 2.94 peratus kepada 920.66 mata, paras tertinggi sejak
dua bulan lalu, bersama-sama dengan peningkatan bursa-bursa saham
serantau.
Di Jepun, Bursa Saham Tokyo telah ditutup 2.07 peratus lebih tinggi
untuk berada pada paras dagangan melebihi 9,000 mata buat pertama kali sejak 10
November lalu.
Menurut penganalisis pasaran dengan Tokai Tokyo Securities,
Makoto Sengoko, harga-harga saham mendapat sokongan daripada bursa saham yang
lebih kukuh di AS dan jangkaan pemulihan ekonomi negara berkenaan pada tahun
ini.
Sementara itu, Penganalisis MIMB Investment Bank, Shahril Anas ketika
mengulas Bursa Malaysia berkata, keadaan pasaran serantau sedikit sebanyak
memberi kesan kepada pasaran tempatan akibat pelabur kembali yakin dengan
pasaran saham global.
''Kenaikan yang berlaku hari ini juga disebabkan
kekukuhan mata wang AS yang telah mengakibatkan harga pasaran minyak mentah
dunia mengukuh dan secara tidak langsung turut mengukuhkan harga pasaran minyak
sawit mentah (MSM).
''Peningkatan pasaran tempatan diterajui oleh
kaunter-kaunter peladangan seperti IOI Corporation dan Sime Darby, selepas
mengalami aliran menurun pada tahun lalu,'' katanya kepada Utusan Malaysia di
sini hari ini.
Shahril berkata, para pelabur melihat pasaran AS sebagai
petanda sebelum membuat sebarang keputusan pelaburan, Wall Street menunjukkan
tanda positif selepas percaya pelan rangsangan Obama dapat membantu memulihkan
ekonomi.
Selain itu, kata beliau, aliran meningkat pada hari ini juga
disumbangkan oleh pengurus-pengurus dana yang mempunyai lebihan tunai selepas
menjual saham-saham pada penghujung dagangan tahun lalu telah mula menunjukkan
minat untuk melabur dalam pasaran pada waktu ini.
Di Eropah, urus niaga pada
awal hari ini menyaksikan Bursa Saham London meningkat 0.40 peratus, Frankfurt
untung 0.63 peratus dan Paris pula bertambah 0.31 peratus.
Di Asia, pasaran
saham Hong Kong menyaksikan peningkatan sebanyak 3.5 peratus, Shanghai melonjak
3.29 peratus, manakala Taipei naik 2.33 peratus.
Pasaran saham Singapura naik
5.2 peratus, Thailand meningkat 6.39 peratus dan Indonesia melonjak sehingga
enam peratus pada akhir dagangan hari ini.
Bursa saham di AS, Eropah dan Asia
ditutup tinggi pada Jumaat lalu dengan harapan yang tinggi bahawa 2009 akan
merupakan tahun lebih baik berbanding tahun sebelumnya setelah penanda aras Dow
Jones merudum sehingga 33.84 peratus iaitu kerugian terburuk sejak 'Great
Depression' di AS pada 1931.
''Indeks pasaran saham seharusnya mengakhiri
2009 dengan berada pada paras tinggi akhir tahun ini,
''Tetapi dalam jangka
pendek, ketidaktentuan akan timbul dan kenaikan terbaru pasaran saham ini akan
terus mengharungi ujian yang teruk pada suku pertama dengan mencatatkan data
makroekonomi yang negatif,'' kata Ketua Pelaburan Strategis di CFC Seymour,
Dariusz Kowalczyk.
Bursa Saham AS meningkat 258.30 mata atau 2.94 peratus
untuk ditutup pada paras 9,034.69 mata, pada Jumaat lalu.
Sumber ketik sini

Aku penah ckp hari kt sapa tah..ekonomi dunia mesti ok balik...tak byk pun sikit..mesti baik balik..apa jadi la ni semua ada kaitan dgn US kan..tggu ja la si Barrack Obama naik jd President US..mesti dia buat sesuatu walaupun skrg duit dlm fed reserve US byk tp tadak nilai...HAhahaha....

Aku tgk e/u pun la ni skali jalan mau dekat 200..tahun ni aku nk rajin2kn diri tamau jadi mcm tahun lepas...

Catatan Menarik Tan Sri Nor Mohamed Yakcop

2008-07-30T12:09:00.002+08:00

THE FINANCIAL CRISIS OF 1997 - 1998
By Nor Mohamed Yakcop

A moment comes, which rarely comes in a lifetime, when a particular event redefines a person’s life and changes the course permanently. For me, the meeting with Dr. Tun Dr. Mahathir Mohamad in Buenos Aires (Argentina) on the evening of October 3, 1997 was such an event. It enabled me to devote the next 6 years of my life working for Dr. Tun Dr. Mahathir Mohamad, meeting him almost daily. In the process, it enabled me to see, at very close range, the abilities of this great man.

The combination of many noble qualities in one person is rare, and it is this unique combination that has enabled Dr. Tun Dr. Mahathir Mohamad to transform Malaysia from an otherwise typical third world country into a thriving and vibrant nation, well on the way to become a developed nation. It is also this combination of qualities that enabled Dr. Tun Dr. Mahathir Mohamad to save Malaysia from becoming another IMF nation during the financial crisis of 1997 - 1998.

I am often asked about my involvement in the recovery plan implemented on September 1, 1998. It began on September 29, 1997, when I received a telephone call from the office of Dr Tun Dr. Mahathir Mohamad informing me that the Prime Minister wanted to see me. The PM was in Cuba at that time, and I asked (in jest) if I was to meet the Prime Minister in Cuba !
I was told (not in jest) that he will be arriving in Buenos Aires on October 3, 1997 and I was to make sure I was in Buenos Aires at least a day before he arrived. I packed my bags and left for Buenos Aires, and arrived in Buenos Aires on October 2.

The PM arrived the following day at 5 pm and we met immediately at his suite. He informed me that he had asked many people to explain to him what was causing the financial crisis but no one was able to give him a satisfactory reply. He asked me whether I could explain to him what exactly was happening.

I asked him how much time he had, and he said two hours. I explained to him how the forex market works, about short positions and long positions, about hedging and how currencies are borrowed and sold, the difference between “bid” and “offer” and how funds can be transferred from one country to another at the click of a button. I also explained how the equity market works and the relationship between the forex market and the equity market. Dr. Tun Dr. Mahathir hardly said anything, asked one or two questions, and listened intently.

After two hours, he had to end the meeting to get ready to go for an official dinner. He asked me about my plans for the night and I said I had been invited for the same dinner. Dr. Tun Dr. Mahathir said to me: You go back to your room and write down all that you have been telling me for the last two hours, and see me at 7 am tomorrow. I went back to my room, skipped dinner, and wrote it all down, finishing at about 6 am.

I saw him the next morning at 7 am and gave him the report. He asked me to take a rest and come back again at 2 pm. When I returned, he told me that he had read the report and that he now understands what was happening in the financial markets. We started discussing various methods of overcoming the crisis, and our discussions continued when we returned to Malaysia. I met him almost daily for discussion, sometimes at his house and sometimes at his office. We tried a few mechanisms to overcome the crisis, some of which worked initially, but the hedge funds were so strong that it was difficult to proceed successfully with these mechanisms.

In early 1998, Dr. Tun Dr. Mahathir Mohamad asked me to explore the idea of imposing an exchange control regime to overcome the crisis. I remember preparing voluminous notes on this subject. Dr. Tun Dr. Mahathir went through the notes carefully, and kept asking for more and more details. We went through many rounds of discussion, until he was finally convinced both with the concept as well as the proposed mechanism. The rest, I guess, is history.

Dr. Tun Dr. Mahathir also asked me to prepare a paper on how to put an end to Malaysian shares traded in CLOB (Central Limit Order Book) in Singapore. Dr. Tun Dr. Mahathir was of the view that an important reason for the falling stock market was the short-selling of Malaysian stocks in CLOB. I prepared the report and Dr. Tun Dr. Mahathir understood, for the first time, how exactly CLOB operates. The report, which was also implemented on September 1, 1998, put to an end the trading of Malaysian shares in CLOB.

I should add that the exchange control measures were crafted in such a way as to minimize the control aspects and maximize the outcome. The Prime Minister went through the proposed mechanism many times to make sure that the control elements were as few as possible, but adequate enough to ensure a positive outcome. There were no bureaucratic elements in these measures, such as requiring importers to obtain Bank Negara’s permission to import. The Ringgit was also pegged at a level where it was not overvalued. In almost every other country, which imposes exchange control measures and pegs its currency, there would, almost by definition, be numerous bureaucratic controls, and the currency would also be pegged at an overvalued rate.

It is often assumed that the system of exchange control (including fixed exchange rate) that we implemented on September 1, 1998 saved the country. The measures of September 1, 1998 were undoubtedly a necessary condition, but it was not a sufficient condition to overcome the crisis. Malaysia was saved, not by exchange control measures per se, but by Dr. Tun Dr. Mahathir Mohamad.

Let me explain. Any other developing country, facing a similar crisis, if it had introduced the measures that we introduced in September 1998, the measures would probably have failed. The fact that in Malaysia these measures succeeded is due to the ability and character of Dr. Tun Dr. Mahathir Mohamad. The economy and the financial system, under Dr. Tun Dr. Mahathir’s leadership, was in a very healthy state–healthy enough for the exchange control measures to be implemented without negative consequences. Moreover, the Prime Minister’s hands-on management style enabled quick and timely decisions to be made, which was vital under the new exchange control regime.

Dr. Tun Dr. Mahathir, as Prime Minister, had ensured that the Malaysian economy was fundamentally strong. Ringgit was strong and stable. On the back of the currency stability (at RM2.50 against the US dollar) Malaysia was doing very well. At the end of 1996, real Gross Domestic Product (GDP) grew at almost 8.5 per cent and the growth was expected to continue for many more years. The government was enjoying a fiscal surplus. The external debt was low, at 40 per cent of the Gross National Product (GNP). The current account of the balance of payments had narrowed from a deficit of 10 per cent to 5 per cent of GNP, and was expected to improve further. Inflation was at its lowest at 2.1 percent. We had steady growth of over 8 per cent for a major part of that period. And this fundamental strength of Malaysia was a critical factor that enabled the exchange control measures to succeed.

For a period of more than a year after the measures of September 1, 1998 were implemented, the Prime Minister met with a small group of us everyday - 6 days a week - for at least 2 hours to go through various economic data, including data on loan growth, exports, imports, property overhang etc. This enabled the Prime Minister to take quick actions, whenever required. I remember one morning when we were going through the property figures, he looked at me and directed that I should organize a property fair to clear the overhang of properties. I did, and property worth more than RM 3 billion was sold. Even after the crisis was over, Dr. Tun Dr. Mahathir continued to meet with the group regularly, though no longer on a daily basis. And Dr. Tun Dr. Mahathir continued to go through all the economic data with a sharp pencil.

No other Prime Minister in the world, either in developed or developing countries, employs such a hands-on approach in managing the economy. We can see, therefore, that it was not the exchange control measures per se that saved the country but the man — Dr. Tun Dr. Mahathir Mohamad — himself.

The period 1997 - 1998 was, to paraphrase Charles Dickens, the worst of times, but it was also the best of times. The worst conditions brought out the best in Dr. Tun Dr. Mahathir Mohamad. There is a saying that a good leader is like good tea - you only know the true quality when he is in hot water !

Throughout the crisis, the Prime Minister was focussed on resolving the crisis. Day and night, he thought of nothing else but the crisis. He read all he could on finance; he kept asking me to prepare notes on various technical issues. Sometimes he was sick with bad flu and cough, but he did not take time off to rest. He was convinced that he had to understand the issues before he could work out the solutions. His native intelligence and ability to focus on core issues were there throughout the crisis. He did not show any sign of fear even at the worst of time, only concern at the fast deteriorating state of the economy. He was, at all times, confident that he would prevail in the end.

I would like to add two additional points related to the financial crisis. The first is that, in implementing the measures of September 1, 1998, Dr. Tun Dr. Mahathir not only saved Malaysia but the neighbouring countries as well. Let me explain. When Malaysia imposed its exchange control measures on September 1, 1998, the currency speculators realised that the other affected countries (Thailand, Indonesia and South Korea) could also impose similar controls, and they, therefore, stopped their activities in its track. The speculators backed off. They bought back the currencies that they had sold. This is resulted in the regional currencies appreciating. Moreover, the International Monetary Fund (IMF) was not happy with what Malaysia had done, particularly since, after implementing the measures, we did exactly the opposite of what the IMF wanted us to do, i.e. we lowered our interest rates and injected liquidity into the system. The IMF, therefore, started relaxing conditions in other countries and allowed them to lower their interest rates and allowed them to inject liquidity to stimulate their economies so that Malaysia would not outperform the IMF countries. Therefore, it is no exaggeration to say that Dr. Tun Dr. Mahathir Mohamad not only saved Malaysia, but the other affected countries in the region as well - Thailand, Indonesia and South Korea.

My second point is regarding what would have happened if the exchange control measures were not implemented. If the measures were not implemented, many of corporations in Malaysia would have gone under, due to the high interest rates. When the corporations fall like dominos, banks would have faced severe liquidity and solvency problems due to the ballooning NPLs. The problems of the banks would have resulted in a credit squeeze, which would have led to another round of corporate failures. The Government’s revenue would have fallen drastically as fewer firms would be paying corporate taxes, thereby reducing the Government’s ability to stimulate the economy through fiscal policy measures. As a result of the problems faced by corporations and banks, unemployment would have increased substantially, leading to a second round of problems. This is the classic vicious cycle, which could have, in the end, destroyed the social and political stability of the country. This was a scenario that was waiting to happen. It did not happen because of the decisiveness and guts of Dr. Tun Dr. Mahathir Mohamad, who decided to take the path less travelled.

We owe Dr. Tun Dr. Mahathir much gratitude for what he has done for Malaysia over the last 22 years. Solving the financial crisis of 1997 - 1998 was just one, albeit perhaps the most important, of Dr. Tun Dr. Mahathir Mohamad’s many contributions to the nation.

On a personal note, over the last 6 years, I have come to admire this great man for his abilities, his high moral values and, most of all, for his sincerity. Certainly, a man like Dr. Tun Dr. Mahathir Mohamad is not born everyday.

(23rd. October, 2003)