Rising Food Prices - Who Should Be Blamed?

[Brian]

Originally Posted by Adrian Wong

Huh? Who told you the government will bail out banks? In most countries, banks that fail are left to die. Even here in Malaysia, our banks are only protected by insurance that limits everyone up to RM 60K of their deposits.

If there's a run on a bank, yes, Bank Negara can help provide temporary liquidity. But no government in the world can simply use tax money to prop up badly-run banks.

Unfortunately, the UK's Northern Rock disagrees with you. The US has seen the same with Bear Stearns. They're unfortunately classified as too big to fail.

Hehe.. You can quote those.. but I can similarly quote an equal number (if not more) links to articles that say otherwise. Do note that not everything printed are their actual opinions. Many banks and companies use the press to push their agendas.

In fact, I would do the same too. For example, if I know that oil prices will rise and I want to buy more shares in oil, I would try my best to convince everyone else that it won't rise. It is in my benefit to convince people that this is so, even if I don't personally believe it.

No matter what people may say... always look at what they actually DO. If people really believe that oil will remain cheap, why the heck do so many countries start providing incentives for the development of biofuel? Didn't you notice the sudden surge of interest in biofuel? If they talk one thing and do something else, I sure would pay more attention to what they are actually doing.

And why would the CEO want to tell everybody that his company is probably overvalued in the long term? Surely he wants his performance to be judged by the stock value, and making comments that might bring the stock value down is counter productive. Oh, and no, he didn't buy tons of his own stock in the time period, so he's not some crook trying to make a quick buck by scaring the market.

I agree that you can easily get other pundits to say otherwise, but these aren't small institutions or single market traders. They're massive institutions, and I would lend more credence to them.

Biofuels have only recently become the 'hot' thing, and there's a large farmers lobby in the US supporting biofuel subsidies in their own self interest.

But really, I don't buy conspiracies. But if you choose to believe in them, by all means, go ahead.

Well, China is still more corrupt than Singapore. Look at the hanky-panky going on in their food industry. But frankly speaking, if China has anything to be proud of in their dark days, it's the relatively low corruption. Officials may abuse their positions but they do generally avoid corruption.

In fact, I would say that their liberalisation have increased corruption. Hence, the increase in cases of corruption. It's not that the older officials are not susceptible to corruption.. but rather there was very little avenue for them to be corrupt in the past.

I've to disagree. This is seen in TI's Corruption Perspections Index, which is by no means an objective assessment, but is an indicator of what's going on. China's been relatively stable in the last 4-5 years. Also, if you see the World Bank's report on corruption in China, we've had a steady reduction instead, and a increase in 2005-2006:

http://info.worldbank.org/governance...07/pdf/c42.pdf

DYKT the first report actually rebuts your assertion that the world did not see it coming. Farming takes time. You have to buy some land, clear it, prepare it for farming BEFORE you can even plant the first seeds.

So, it takes time for them to increase production. If they intend to increase it, it shows that they think demand for rice will increase and become more expensive, hence making it profitable for them to grow more rice. Again, this is actual action being done as opposed to mere opinions by pundits.

Actually, if you read more, you would know that even Australia was hit by a severe drought which caused them to lose a significant part of their harvest. Australia, I believe, is the world's second largest exporter of wheat.

Plus, an increase of 1.8% is not much. It is expected as it takes time to ramp up production of foodstuff. But it's hardly going to help much if a drought in China or Thailand (for example) wipes out 5-10% of the export market.

It might take time, but if you're right and the world has seen it for a long time(I'm assuming in the last 3-5 years), we wouldn't have seen the panic today. Of course you could easily say that it might take a longer time to prepare farmland, but the fact that not a single government prepared for this either points to the fact that all governments are incompetent or none actually saw it.

I say again, hindsight is 20/20.

If there's no genuine technological and monetary support to help improve productivity, how can they be competitive? This is a major failing of our government.

But how do you know that there isn't any? Isn't the investment announced by our government recently also one? It's certainly a kneejerk reaction, but I don't believe that our government's basically abandoned our farmers.

I would disagree with that. The Old Man did a lot of damage but he was in power for so long. Abdullah Badawi and his BNputras did all this damage in his FIRST TERM! If we let thim continue, I don't think the country will last another full term.

If you think it's just another event, then you have to be blind, deaf AND forgetful. Hehe...

No offence but go read up on the Putrajaya project, where they cheated the people of RM 5.8 billion. What about Terengganu's Wang Ehsan (running into several billion ringgit already) or the RM 300 million PER YEAR Monsoon Cup (that's RM 1.5 BILLION in 5 years!!!)? Forgotten Abdullah Badawi's RM 50 million private jet plane and his RM 30 million yacht? Fuh... What a list of amazing accomplishments our most "esteemed" Prime Minister has!

Oh no no no. Mahathir and Ku Li's Bank Bumi bustup occured in the first term too. He also lost a few hundred million in trying to speculate in the price of tin in his first year (RM650 million in 1981 dollars iirc).

Oh yes, and Mahathir was bombed with allegations of a RM200 million private jet himself

The point is, trying to paint AAB as being as the worst PM ever when it comes to squandered funds isn't exactly right when you consider what his glorious predecessor has done, even if you compare term for term. Which is why I said......it's normal......almost business as usual, which sounds kinda sad when you think of the massive mismanagement that has occured.

It's just that the Internet's given his critics a much more open playing field compared to Mahathir's era. And that's a good thing when it comes to transparency. And that is why I think we'll be able to make good progress in the medium term with this transparency.

I do agree with you that most, if not all governments would want to hold back exports in order to save themselves from getting overthrown by pissed off citizens, which is a pity really imo. Self preservation is simply another name for economic nationalism, which is something I do not agree with

[Adrian Wong]

Originally Posted by Brian

Unfortunately, the UK's Northern Rock disagrees with you. The US has seen the same with Bear Stearns. They're unfortunately classified as too big to fail.

Only those two cases? What about the many other banks that have collapsed since? You will note that in both cases, the banks were not actually bailed out in the sense that the PKFZ was a bail-out.

Northern Rock was given emergency funds by the Bank Of England because they had liquidity problems. In other words, they did not have the cash to return depositors who asked for it. As mentioned earlier, in such situations, central banks do provide commercial banks temporary funds to avoid a panic run on the bank.

In Bear Sterns case, they were not actually bailed out by the US government. They were SOLD lock, stock and barrel to JP Morgan for less than 10% of their value. The Federal Reserve only provided a US$ 30 billion loan backed by Bear Sterns assets for JP Morgan to complete the purchase.

In both cases, the "bail-outs" were done in order to preserve public confidence in financial institutions at a time when the banking industry is suffering from a massive liquidity problem and losses due to the subprime mortgage crisis.

For every bail-out, you can be sure many other banks were allowed to die. Forgot about Barings (1995) already? A quick Google search will reveal many other banks which were allowed to collapse. Like Netbank in the US (2007), UK's Bank Of Credit & Commerce International (1991), Metropolitan Savings Bank (2007).

From a news report by the Pittsburgh Post-Gazette - "Across the country, there have been 29 bank failures since October 2000, an average of about four a year." That's how often banks are let to die.

In the US, the FDIC insures deposits in member banks by up to $100,000 per depositor. This is similar to the system over here, albeit ours is much less at RM 60,000 per depositor.

So, no, governments generally do not bail out their banks unless it is necessary to ensure stability or national security.

Originally Posted by Brian

And why would the CEO want to tell everybody that his company is probably overvalued in the long term? Surely he wants his performance to be judged by the stock value, and making comments that might bring the stock value down is counter productive. Oh, and no, he didn't buy tons of his own stock in the time period, so he's not some crook trying to make a quick buck by scaring the market.

I don't know about that CEO or what he did personally. But he could very well be wrong. After all, there are so many other pundits and industry experts who took the OPPOSITE view. IMHO, look at the BIG picture.

Originally Posted by Brian

I agree that you can easily get other pundits to say otherwise, but these aren't small institutions or single market traders. They're massive institutions, and I would lend more credence to them.

LOL! What makes you think the other people who disagreed with your quoted CEO are small fries?

The size of the institution does not make them any less likely to tell lies or commit hanky-panky to further their own agendas. Look at the subprime mortgage crisis. Practically all the banks involved kept insisting that it was all okay, everything was hunky-dory... until they had to choice but to reveal the full extent of the damage during audits.. or when they had to ask for financial assistance. I believe it was something like US$ 3 TRILLION and counting? That's the guarantee of size for you.

Originally Posted by Brian

Biofuels have only recently become the 'hot' thing, and there's a large farmers lobby in the US supporting biofuel subsidies in their own self interest.

But really, I don't buy conspiracies. But if you choose to believe in them, by all means, go ahead.

Exactly. Why now? Why did investors and governments suddenly developed a keen interest in biofuels and alternative power sources?

Biofuel is NOT cheap. In fact, biofuels are more expensive than regular petrol/diesel. That means these countries and investors have already predicted that oil prices will rise high enough for biofuel to be economically feasible.

Yes, the farming lobby in the US has been pushing for biofuel subsidies and whatnots. You must understand that they are so productive that they have large stockpiles of grain. Of course, they want to make more money. But what they want are not what biofuel investors are interested in.

So what if the lobby keeps asking for biofuel subsidies? They have been asking for years. Why the sudden change of heart? As far as the biofuel investors are concerned, there must be a real potential for profit for THEM. Otherwise, why should they spend so much money in biofuel? Only a huge increase in oil prices can ensure them of that profit... and that's something no farmer's lobby can do.

I don't know why you think this is a conspiracy. The facts are right there. You can easily search online for the cost of biofuels. You will see that they are NOT cheap to make, even if you do not factor in the cost of building the facility.

Originally Posted by Brian

I've to disagree. This is seen in TI's Corruption Perspections Index, which is by no means an objective assessment, but is an indicator of what's going on. China's been relatively stable in the last 4-5 years. Also, if you see the World Bank's report on corruption in China, we've had a steady reduction instead, and a increase in 2005-2006:

http://info.worldbank.org/governance...07/pdf/c42.pdf

Aiyoo.. It only shows the recent years. What we have been talking about is China before and after liberalisation. In any case, China's corruption is definitely higher than that of Singapore, but lower than over here in Malaysia.

Originally Posted by Brian

It might take time, but if you're right and the world has seen it for a long time(I'm assuming in the last 3-5 years), we wouldn't have seen the panic today. Of course you could easily say that it might take a longer time to prepare farmland, but the fact that not a single government prepared for this either points to the fact that all governments are incompetent or none actually saw it.

I wouldn't know when people started feeling that the demand will increase enough to make it worthwhile to invest in new farmland... but I would think most of the increased cultivation only occurred in the last 1-3 years.

Err.. How do you know that not a single government prepared for the rise in food prices? IMHO, the increased cultivation alone says that at least those people saw it coming.

In any case, food prices have been on the rise for a long time now, so it's impossible for these governments not to notice. More than a year ago, I saw a report on inflation in China where price of food increased by 2-3X from the previous year. That was over a year ago. Only here in Malaysia are our staple foods subsidized and their prices controlled. Hence, we are not so aware of the rise in global food prices.

Originally Posted by Brian

But how do you know that there isn't any? Isn't the investment announced by our government recently also one? It's certainly a kneejerk reaction, but I don't believe that our government's basically abandoned our farmers.

Because there has been limited investment in the farming industry by the government and Bernas. Did you not read a recent report (a few weeks ago?) that a farmer created his own machine to automate the plowing and planting of rice? He did it on his own. There was no government help at all.

You can check on what Bernas did. By not encouraging the local farmers to improve their productivity, yes, they basically abandoned the farmers. The only reason why the farmers are not fuming about things is because food prices have gone up... and they are making good money.

Originally Posted by Brian

Oh no no no. Mahathir and Ku Li's Bank Bumi bustup occured in the first term too. He also lost a few hundred million in trying to speculate in the price of tin in his first year (RM650 million in 1981 dollars iirc).

I believe that's Daim Zainuddin's fault? In any case, it's one thing for the bank to speculate and fail... only to have the government bail it out. It's ANOTHER thing altogether to have politicians make use of the government to cheat the people's money.

Look at the Bank Bumi bail-out for example. Bank Bumi did not buy tin at RM 1 and insist the government buy it at RM 20. They speculated and failed, like any other bank. The government could have bailed Bank Bumi out to ensure national stability and faith in the banks. Of course, they had to protect the image of the "towering Malays" that Mahathir was trying to cultivate as role models for the people.

The PKFZ bail-out is a totally different story. This is a clear-cut case of embezzlement by our politicians. Imagine buying land at RM 3 psf and getting the Port Klang Authority to buy it at RM 25 psf. Then they got PKA to agree to let them build up the place and run it for exhorbitant amounts of money. Then after running the PKFZ into over RM 1 billion worth of debts, they got the government to bail them out for RM 4.6 billion.

Originally Posted by Brian

Oh yes, and Mahathir was bombed with allegations of a RM200 million private jet himself

Where is Mahathir's private jet? He is a corrupt old man but where is this airplane of his? How often did he fly out of the country anyway?

We have all seen Abdullah's private jet. We have also heard of how he uses it to fly his family and friends to Australia every 2 weeks.

Originally Posted by Brian

The point is, trying to paint AAB as being as the worst PM ever when it comes to squandered funds isn't exactly right when you consider what his glorious predecessor has done, even if you compare term for term. Which is why I said......it's normal......almost business as usual, which sounds kinda sad when you think of the massive mismanagement that has occured.

Actually, practically everyone agrees that AAB is the WORST Prime Minister ever! Even people in UMNO.

When I first moved down to PJ (over 2 years ago), I had a guy come set up the Astro for me. Out of the blue, he tells me just how useless Abdullah is and how he wished that Mahathir was in charge. He said that even though the Old Man was corrupt and all that, things were much better under his administration.

Look at the reports coming in from within UMNO. Even they hate him. He is totally ineffectual as a PM. He has no vision and no ability to get things done. All he does is spout slogans. Why do you think people call him Mr. Slogan?

Of all the Prime Ministers we have had, Abdullah Badawi is the most useless one. That is a fact. And from the reports we are getting, it looks like he may not even get through this year! For certain, he will be known as the PM who suffered the greatest defeat in the polls and the one with the shortest administration in Malaysia's history.

Originally Posted by Brian

It's just that the Internet's given his critics a much more open playing field compared to Mahathir's era. And that's a good thing when it comes to transparency. And that is why I think we'll be able to make good progress in the medium term with this transparency.

Many people have said that but I disagree. Like Mahathir, Abdullah and his 4th floor boys did not believe in transparency. Why do you think they controlled the press so tightly? Even got Vincent Tan to buy over theSun.

Forgotten already about their crackdown on HINDRAF and the Tamils at Batu Caves? Or the watergunning of peaceful protestors with their children at the Parliament? Is that transparency or freedom of speech? Ptui...

No. Badawi is as much of a tyrant as Mahathir. Only problem is he's stupid and weak. IMHO, the only reason why blogs and such were allowed to flourish was because they underestimated the power of the Internet. Heck, they virtually ignored it.

As for his perceived RELATIVE gentleness (compared to Mahathir) in combating dissent, frankly speaking, that's not true either. Abdullah Badawi is a weak, indecisive man.

Originally Posted by Brian

I do agree with you that most, if not all governments would want to hold back exports in order to save themselves from getting overthrown by pissed off citizens, which is a pity really imo. Self preservation is simply another name for economic nationalism, which is something I do not agree with

Then I hope you will never become the leader of the country I live in!

Remember, in a democracy, the government REPRESENTS the WILL OF THE PEOPLE. That is exactly what those governments are doing. If you disagree with that.. and insist on doing it your way... well, aren't you being a tyrant?

[Brian]

Originally Posted by Adrian Wong

Only those two cases? What about the many other banks that have collapsed since? You will note that in both cases, the banks were not actually bailed out in the sense that the PKFZ was a bail-out.

Northern Rock was given emergency funds by the Bank Of England because they had liquidity problems. In other words, they did not have the cash to return depositors who asked for it. As mentioned earlier, in such situations, central banks do provide commercial banks temporary funds to avoid a panic run on the bank.

In Bear Sterns case, they were not actually bailed out by the US government. They were SOLD lock, stock and barrel to JP Morgan for less than 10% of their value. The Federal Reserve only provided a US$ 30 billion loan backed by Bear Sterns assets for JP Morgan to complete the purchase.

In both cases, the "bail-outs" were done in order to preserve public confidence in financial institutions at a time when the banking industry is suffering from a massive liquidity problem and losses due to the subprime mortgage crisis.

For every bail-out, you can be sure many other banks were allowed to die. Forgot about Barings (1995) already? A quick Google search will reveal many other banks which were allowed to collapse. Like Netbank in the US (2007), UK's Bank Of Credit & Commerce International (1991), Metropolitan Savings Bank (2007).

Actually the Northern Rock has been nationalised as of right now. And the 'loan' by the Fed isn't exactly a loan in the normal terms that you and I would understand it.

I understand the pragmatist's POV, to keep the banking sector running to ensure we don't go into full blown meltdown.

I've said it before, there are banks which are too big to let them fail, unfortunately, Bear Stearns, being the fifth largest investment bank in the US and Northern Rock, which is a big high street bank were simply too big to let them fail, else you would get massive aftershocks in the financial system. Barings may be the oldest merchant bank, but its capitalisation was puny compared to what Northern Rock or Bear Stearns has.

Bank Bumi, well, being another government propped up bank, had a similar size relative to the Malaysian economy. The point is, they're both bailouts on a massive scale.

I don't know about that CEO or what he did personally. But he could very well be wrong. After all, there are so many other pundits and industry experts who took the OPPOSITE view. IMHO, look at the BIG picture.

He was wrong. Oil shot up to 100 USD per barrel. But it goes to show that the market did not anticipate it, which you've been saying over and over again. It anticipated a rise, but one of such magnitude? I think not. What's the big picture?

LOL! What makes you think the other people who disagreed with your quoted CEO are small fries?

The size of the institution does not make them any less likely to tell lies or commit hanky-panky to further their own agendas. Look at the subprime mortgage crisis. Practically all the banks involved kept insisting that it was all okay, everything was hunky-dory... until they had to choice but to reveal the full extent of the damage during audits.. or when they had to ask for financial assistance. I believe it was something like US$ 3 TRILLION and counting? That's the guarantee of size for you.

Oh no, they're certainly not small fries, but are they small fries compared to those banks, the biggest in America? Yes they are, and that's a fact.

Of course, being big doesn't make you wrong, but I was rebutting what you said about the market having known that prices were going to jump up by such a magnitude. It's clear that they didn't, and that's the point I'm illustrating here.

Exactly. Why now? Why did investors and governments suddenly developed a keen interest in biofuels and alternative power sources?

Biofuel is NOT cheap. In fact, biofuels are more expensive than regular petrol/diesel. That means these countries and investors have already predicted that oil prices will rise high enough for biofuel to be economically feasible.

Yes, the farming lobby in the US has been pushing for biofuel subsidies and whatnots. You must understand that they are so productive that they have large stockpiles of grain. Of course, they want to make more money. But what they want are not what biofuel investors are interested in.

So what if the lobby keeps asking for biofuel subsidies? They have been asking for years. Why the sudden change of heart? As far as the biofuel investors are concerned, there must be a real potential for profit for THEM. Otherwise, why should they spend so much money in biofuel? Only a huge increase in oil prices can ensure them of that profit... and that's something no farmer's lobby can do.

I don't know why you think this is a conspiracy. The facts are right there. You can easily search online for the cost of biofuels. You will see that they are NOT cheap to make, even if you do not factor in the cost of building the facility.

Biofuels are not cheap, but they're certainly made cheap by those subsidies. There has not been a sudden change of heart, but the subsidies were passed back in 2002, making it competitive with the price of oil back then. And last I checked, oil prices were hovering below USD 30 back then, and the only big event that was supposed to raise the price of oil was the impending war in Iraq.

Aiyoo.. It only shows the recent years. What we have been talking about is China before and after liberalisation. In any case, China's corruption is definitely higher than that of Singapore, but lower than over here in Malaysia.

Whoops, I misread the graph. It was increasing, and then you had a reduction in 2005-2006. Sorry for that error

For comparison, here's Malaysia's and Singapore's reports.

Malaysia
http://info.worldbank.org/governance...7/pdf/c155.pdf

Singapore
http://info.worldbank.org/governance...7/pdf/c193.pdf

Surprisingly, Malaysia's above China there, which is something I find hard to believe, but then again, I've never lived in China, so I can't do comparisons myself

I wouldn't know when people started feeling that the demand will increase enough to make it worthwhile to invest in new farmland... but I would think most of the increased cultivation only occurred in the last 1-3 years.

Err.. How do you know that not a single government prepared for the rise in food prices? IMHO, the increased cultivation alone says that at least those people saw it coming.

In any case, food prices have been on the rise for a long time now, so it's impossible for these governments not to notice. More than a year ago, I saw a report on inflation in China where price of food increased by 2-3X from the previous year. That was over a year ago. Only here in Malaysia are our staple foods subsidized and their prices controlled. Hence, we are not so aware of the rise in global food prices.

But cultivation has always increased year on year, barring large crop failures.

You say you wouldn't know it yourself, yet you're wagering that people have seen it for a long time coming. What are you really supporting here?

I believe that's Daim Zainuddin's fault? In any case, it's one thing for the bank to speculate and fail... only to have the government bail it out. It's ANOTHER thing altogether to have politicians make use of the government to cheat the people's money.

Look at the Bank Bumi bail-out for example. Bank Bumi did not buy tin at RM 1 and insist the government buy it at RM 20. They speculated and failed, like any other bank. The government could have bailed Bank Bumi out to ensure national stability and faith in the banks. Of course, they had to protect the image of the "towering Malays" that Mahathir was trying to cultivate as role models for the people.

The PKFZ bail-out is a totally different story. This is a clear-cut case of embezzlement by our politicians. Imagine buying land at RM 3 psf and getting the Port Klang Authority to buy it at RM 25 psf. Then they got PKA to agree to let them build up the place and run it for exhorbitant amounts of money. Then after running the PKFZ into over RM 1 billion worth of debts, they got the government to bail them out for RM 4.6 billion.

Abdullah wasn't exactly directly involved in the PKFZ himself either, and neither was Mahathir, but the point is, they occured under their administration, and thus they share an equal portion of the blame.

But remember, even if most of the losses occured under Abdullah, it was under Mahathir that the purchase of that land occured where the RM10 psf (I got that figure from Anwar's speech) land, valued by the government guys, was then bought for RM25 psf. Oh no, and I'm not saying the bailout's nothing other than to save their cronies skin either. It's just the same.

The point I'm trying to get across is that Abdullah's just another continuation of Mahathir, with a sleepy image which certainly doesn't endear him to the public when everything's going wrong.

Where is Mahathir's private jet? He is a corrupt old man but where is this airplane of his? How often did he fly out of the country anyway?

We have all seen Abdullah's private jet. We have also heard of how he uses it to fly his family and friends to Australia every 2 weeks.

1998, after Anwar got sacked, I quote:

Anwar Ibrahim, who is on trial on charges of corruption and sexual misconduct, said Prime Minister Mahathir Mohamad had spent around $100m on a private jet and a new official residence.

"The people can see for themselves how the prime minister lives in his glittering palace and flies in his sophisticated executive jet," Mr Anwar said in a statement read by his wife outside the court.

BBC News | Asia-Pacific | Anwar denounces Malaysian PM

To me it's just the same old, same old thing.

Actually, practically everyone agrees that AAB is the WORST Prime Minister ever! Even people in UMNO.

When I first moved down to PJ (over 2 years ago), I had a guy come set up the Astro for me. Out of the blue, he tells me just how useless Abdullah is and how he wished that Mahathir was in charge. He said that even though the Old Man was corrupt and all that, things were much better under his administration.

Look at the reports coming in from within UMNO. Even they hate him. He is totally ineffectual as a PM. He has no vision and no ability to get things done. All he does is spout slogans. Why do you think people call him Mr. Slogan?

Of all the Prime Ministers we have had, Abdullah Badawi is the most useless one. That is a fact. And from the reports we are getting, it looks like he may not even get through this year! For certain, he will be known as the PM who suffered the greatest defeat in the polls and the one with the shortest administration in Malaysia's history.

Oh, of course he has, he's led them to their worst showing ever. He's also had a much more informed society and free media on his back, and also more people being able to access alternative views on the Internet, and this is easily disseminated further using SMSes.

I know, the 4th floor boys are terrible, but I doubt Citizen Nades would've existed during Mahathir's days, and we know what happened in MGG Pillai's case.

Personally, I'm happier with an Abdullah in trouble than a Mahathir in trouble. The last time Mahathir got into trouble in UMNO, our judiciary's independence was pretty much lost and freedom of religion just became a hollow sounding word.

Mahathir's done the slogans too himself. Just replace 'Development Region' and 'Corridor' with 'Mega Project', and you'll see that they're the same. Failures and bailouts? Well, the MSC is a prime example. Tried to make Malaysia some Silicon Valley of the East. Prime vision, but the implementation was so poor that the MSC's just a hollow sounding name today.

Oh yes, I don't disagree with you that Abdullah lacks a coherent vision. But you're ignoring Mahathir's many faults while decrying what Abdullah has done. Which is why I said, it's business as usual as far am I'm concerned.

Then I hope you will never become the leader of the country I live in!

Remember, in a democracy, the government REPRESENTS the WILL OF THE PEOPLE. That is exactly what those governments are doing. If you disagree with that.. and insist on doing it your way... well, aren't you being a tyrant?

Oh, but you're insisting your own way too over mine, which also makes you a tyrant?

There's nothing wrong with any of us voicing our views, and debating them, but there's simply no need to accuse one another of being tyrants

No, I agree with you, and it is true that there's always an element of self preservation in any government of person. The idealist in me disagrees though. It certainly isn't very pragmatic, and it certainly clashes with your viewpoint, but that's my view, and I'm open to suggestions on how to accommodate other viewpoints.

[Zenphic]

Holy mole this thread is long lol
Speaking of rising food prices though, the rice in Canada just increased by a few dollars a few weeks ago

[Adrian Wong]

Originally Posted by Brian

Actually the Northern Rock has been nationalised as of right now. And the 'loan' by the Fed isn't exactly a loan in the normal terms that you and I would understand it.

Yes, Northern Rock has effectively been nationalised but not as a bail-out. As stated earlier, like other banks affected by the credit crunch due to the subprime mortgage crisis, NR had to borrow money from the Bank of England to counter a run on the bank.

In fact, there was a run on the bank and they had to borrow billions of pounds from the BoC just to return to jittery depositors who were asking to withdraw their savings. The run happened due to panic, even though NR had more than enough assets. They only had a liquidity problem.

Of course, NR had to pay back the loan. It was not FREE money. Two groups (Virgin and Olivant?) and probably several more attempted to buy over Northern Rock but things fell through and eventually the government had no choice but to take over the management.

Remember, the British government has to safeguard the money they loaned to Northern Rock. Unlike here in Malaysia, where you can just write it off and forget about it. Even today, NR is doing its best to return the loan. Quote - "On 18th March, Northern Rock announced the measures that they would be taking to reduce their Government debt, hopefully entirely within three to four years"

In other words, bail-outs (as in GIVE and FORGET) appear to happen only in Malaysia. It's bad practice and stinks of corruption and cronyism, but it's certainly not the norm. You will also note that Northern Rock and Bear Sterns are NOT government banks.

So in conclusion... government-backed banks will not necessarily be rescued by the government.. and even commercial banks CAN be rescued by the government if they feel there is a genuine need to.

Originally Posted by Brian

I've said it before, there are banks which are too big to let them fail, unfortunately, Bear Stearns, being the fifth largest investment bank in the US and Northern Rock, which is a big high street bank were simply too big to let them fail, else you would get massive aftershocks in the financial system. Barings may be the oldest merchant bank, but its capitalisation was puny compared to what Northern Rock or Bear Stearns has.

Bank Bumi, well, being another government propped up bank, had a similar size relative to the Malaysian economy. The point is, they're both bailouts on a massive scale.

Of course the government has to bail out the big boys. Not only because their fall would mean loss of money for many more people, it also strikes fear into the people... and that could precipitate a run on all the other banks.

But the point is all these bail-outs have to be done for the good of the country. Of course, in the US and UK bail-outs, there seems to be proper accountability. The people are certain more scrupulous about the use of public money over there.

Originally Posted by Brian

He was wrong. Oil shot up to 100 USD per barrel. But it goes to show that the market did not anticipate it, which you've been saying over and over again. It anticipated a rise, but one of such magnitude? I think not. What's the big picture?

Some people (like the CEO in this case) just refuse to believe. This is why some airlines lost a lot of money because they too refused to believe that oil prices can remain high for so long.. or even go up. Other airlines believed otherwise and thus benefitted by hedging most of their oil futures at the high price (at that time).

Recently, I believe MAS just announced that they would be hedging a significant amount of their oil futures at $95 per barrel? And another significant amount at an even higher price. Something like that. That tells us that MAS feels that oil prices will remain high.. or go up further.

No matter who believes what... you pay your money and you take your chances. Some people may have seen it coming and chose not to do anything about it. Maybe they didn't believe, maybe they didn't WANT to believe. In any case, they sure paid for it.

But one thing's for sure. There are people who foresaw this and they are the ones benefitting from the rise in oil prices. Look at the way the Saudis and Singaporeans are buying up assets in the US.

Originally Posted by Brian

Oh no, they're certainly not small fries, but are they small fries compared to those banks, the biggest in America? Yes they are, and that's a fact.

Bear Sterns, as you mentioned above, is "the fifth largest investment bank in the US" and yet these big boys FAILED to predict the outcome of the subprime crisis. No, size does not matter. A larger crystal ball will not make your predictions any more accurate.

No matter how big or small you are, you are just as liable to make the same mistakes. It's just like gambling. You can bet small or you can bet big. The risk of making the wrong decision is the same, no matter how much you bet. It's merely the MAGNITUDE of the reward or the failure that differs.

Originally Posted by Brian

Of course, being big doesn't make you wrong, but I was rebutting what you said about the market having known that prices were going to jump up by such a magnitude. It's clear that they didn't, and that's the point I'm illustrating here.

You are not. A few big banks/companies does not make a market. In fact, the current subprime crisis has shown that institutional players were all hesitant about admitting mistakes and acting fast. IMHO, it's not that they didn't see it coming... it's just that they just refuse to believe they could have made such a monumental mistake.

Until today, everyone is wondering... how could these people not have seen it coming. Even before all those banks and financial institutions started reporting billlions of dollars of losses, everyone was already talking about the "impending housing crisis". Apparently, everyone KNEW about the crisis before the banks. No, they are not stupid. They just refused to see the writing on the wall. That is exactly why they suffered severe losses.

Of course, we are not talking about subprime losses but rather increase in food prices. The point I'm making here is that large organizations have a kind of institutional inertia. Whether it's because of the sheer size of their assets (or egos), they may know something is wrong.. but they will resist doing something about it.

Coming back to the rise in food... as mentioned earlier, the writing was on the wall. Over a year ago (probably close to two years now), China had already reported massive inflation of food prices. Even then, the people in China were already grumbling.

Even here in Malaysia, we were also feeling the effects. I know... cause I'm always very tight... and things have been getting tighter and tighter. So food prices going up? Yeah, I KNEW about it long ago. I saw it coming, so did many other Malaysians. Why do you think so many people are disgruntled with Abdullah's policies?

Originally Posted by Brian

Biofuels are not cheap, but they're certainly made cheap by those subsidies. There has not been a sudden change of heart, but the subsidies were passed back in 2002, making it competitive with the price of oil back then. And last I checked, oil prices were hovering below USD 30 back then, and the only big event that was supposed to raise the price of oil was the impending war in Iraq.

Subsidies help but they are still more expensive than ordinary oil. Also, with food prices rising, so will the cost of the base materials needed for biofuels.

No matter what, the increased interest in biofuel definitely lies in the strong prospect for profit, not subsidy. That means increased oil prices. Otherwise, even with subsidy, biofuel will not be a viable alternative to regular oil.

Originally Posted by Brian

For comparison, here's Malaysia's and Singapore's reports.

Malaysia
http://info.worldbank.org/governance...7/pdf/c155.pdf

Singapore
http://info.worldbank.org/governance...7/pdf/c193.pdf

Surprisingly, Malaysia's above China there, which is something I find hard to believe, but then again, I've never lived in China, so I can't do comparisons myself

Well, IMHO, the best thing would be to compare the corruption index since the 70s. Then you can see the effect of strong authoritarian rule in China and lack of opportunities for corruption before the opening of China... and the corruption index after China opened up the economy.

Originally Posted by Brian

But cultivation has always increased year on year, barring large crop failures.

You say you wouldn't know it yourself, yet you're wagering that people have seen it for a long time coming. What are you really supporting here?

Huh.. Do you have proof that everyone has always been increasing cultivation of food crops?

No, I did not say they saw it coming since a long time ago. I only said many people saw the writing on the wall... IMHO, probably in the last 1-3 years, when things started going bad. That's why whatever increase in food cultivation globally had little effect, compared to the major shortage in food supplies caused by bad weather, etc. this year.

Originally Posted by Brian

Abdullah wasn't exactly directly involved in the PKFZ himself either, and neither was Mahathir, but the point is, they occured under their administration, and thus they share an equal portion of the blame.

Actually, the cabinet function as one voice. That means all decisions are UNANIMOUS. Kinda stupid idea IMHO but that's the BN model. So, everyone in the cabinet (including Abdullah and Mahathir la) must accept blame for approving it.

Originally Posted by Brian

But remember, even if most of the losses occured under Abdullah, it was under Mahathir that the purchase of that land occured where the RM10 psf (I got that figure from Anwar's speech) land, valued by the government guys, was then bought for RM25 psf. Oh no, and I'm not saying the bailout's nothing other than to save their cronies skin either. It's just the same.

Yup, the land was only valued at RM 10 psf but the original price was RM 3, IIANM.

IMHO, Dr. M cannot deny that he was to blame for this fiasco either... ALTHOUGH we have proof that Ling Liong Sik and Chan Chong Choy, both dirty MCA rats, illegally issued letters of support (essentially government guarantees) without Cabinet knowledge or approval.

HOWEVER, Abdullah Badawi (and his cabinet) bears the SOLE responsibility of agreeing to BAIL OUT PKFZ. Now, that is something Mahathir should not be blamed for. Abdullah Badawi could have just let PKFZ die...

After all, what's there to lose but a few hundred warehouses and a few other buildings? It's not like PKFZ is a bank with thousands of Malaysian depositors who could lose their hard-earned savings.

Of course, he should also launch an investigation into the matter, as well as prosecute those responsible for illegally signing those letter of support. None of which he did.

So, if you ask me, Abdullah Badawi turned a RM 1.8 billion loss into a RM 4.6 billion loss (and counting!). Let's not forget the RM 5.8 billion Putrajaya apartment project. That was under Abdullah.

Originally Posted by Brian

The point I'm trying to get across is that Abdullah's just another continuation of Mahathir, with a sleepy image which certainly doesn't endear him to the public when everything's going wrong.

Eh, as corrupt and iron-handed as Mahathir was, at least he did something for the country. What did Abdullah do but sleep?

That's the problem. In the last 5-6 years, Malaysia was like a ship with the captain sleeping at the wheel. That's why we failed to notice the coming storm. Now that we are in the midst of the perfect storm, do you really blame the people (crew) for wanting to make the captain walk the plank?

Originally Posted by Brian

1998, after Anwar got sacked, I quote:

BBC News | Asia-Pacific | Anwar denounces Malaysian PM

To me it's just the same old, same old thing.

Actually, till today, I have not seen Mahathir's plane but I sure have seen Badawi's plane! In fact, I've also seen his yacht.

Originally Posted by Brian

Oh, of course he has, he's led them to their worst showing ever. He's also had a much more informed society and free media on his back, and also more people being able to access alternative views on the Internet, and this is easily disseminated further using SMSes.

I know, the 4th floor boys are terrible, but I doubt Citizen Nades would've existed during Mahathir's days, and we know what happened in MGG Pillai's case.

Woah.. woah.. Free media????? Where's the free media? Why do you think so many people stopped buying local newspapers? Have you read the stuff they printed in the papers before and during the elections? LOL! How can that be free media???

Ahh.. They cannot control the Internet, but they sure employed cybertroopers to go mess up opposition blogs. They also attacked and brought down opposition blogs, like Malaysia-Today.

LOL!! Didn't you notice that theSun was bought up by Vincent Tan (yeah, the guy in the Lingam tape) before the elections... and the staff instructed (in front of Khir Toyo) NOT to write any more negative stories about the Selangor government or Khir Toyo. Didn't you notice that Citizen-Nades was effectively shut up and sent for a "holiday" during the elections?

No, the press was no freer than it was during Mahathir's days. Badawi's people are just less intelligent. Okay, I will use the word - stupider.

Originally Posted by Brian

Personally, I'm happier with an Abdullah in trouble than a Mahathir in trouble. The last time Mahathir got into trouble in UMNO, our judiciary's independence was pretty much lost and freedom of religion just became a hollow sounding word.

Err.. So our judiciary was better after Badawi left? Look at the crap that went on in Abdullah's term. He shove a Constitutional change down the Agong's throat just to extend the EC Chairman's retirement age by one year. He elected the a private lawyer to the Federal High Court! In which aspects do you feel our judicial system has improved since Abdullah took over until the recently concluded elections?

Freedom of religion? You gotta be kidding me. Only in Badawi's time did we hear of nonsense like body snatching, Islam Hadhari, tearing down of Hindu and Buddhist temples? Only under Badawi did we learn that only Muslims are allowed to use the word Allah, and that the Bible cannot be translated into Malay (although this was already done by a Malay Muslim centuries ago). No one has interfered into religion more than Abdullah Badawi.

Originally Posted by Brian

Mahathir's done the slogans too himself. Just replace 'Development Region' and 'Corridor' with 'Mega Project', and you'll see that they're the same. Failures and bailouts? Well, the MSC is a prime example. Tried to make Malaysia some Silicon Valley of the East. Prime vision, but the implementation was so poor that the MSC's just a hollow sounding name today.

Eh, slogans are different from pet projects. Everyone knows.. Mahathir's weakness is his penchant for mega-projects. He probably has an inferiority complex. Maybe large phallic objects like the Petronas twin towers make him feel like a bigger man. Who knows... but it sure is different from slogans la...

Have you heard Abdullah talk before or not? Never heard of his many slogans? LOL! He's famous for coming up with slogans for different issues. But real work or policy = NO.

Originally Posted by Brian

Oh yes, I don't disagree with you that Abdullah lacks a coherent vision. But you're ignoring Mahathir's many faults while decrying what Abdullah has done. Which is why I said, it's business as usual as far am I'm concerned.

No, I'm not. I've already said many times that Mahathir has many faults. But Abdullah Badawi is ABSOLUTELY the worst Prime Minister ever... bar none. This is not only my opinion, but also an opinion shared with most Malaysians believe, including many people in UMNO right now.

Originally Posted by Brian

Oh, but you're insisting your own way too over mine, which also makes you a tyrant?

There's nothing wrong with any of us voicing our views, and debating them, but there's simply no need to accuse one another of being tyrants

Ahh.. You did not read what I wrote in the right context. Let me clarify.

You said "Self preservation is simply another name for economic nationalism, which is something I do not agree with"

In a democracy, the government REPRESENTS the WILL OF THE PEOPLE. You may think it's wrong for the government to interfere with the free market to ensure the people are happy. But that's democracy. They are LISTENING to the will of the people.

If you, as a Prime Minister, insist on going against the will of the people. Then, aren't you being a tyrant?

Originally Posted by Brian

No, I agree with you, and it is true that there's always an element of self preservation in any government of person. The idealist in me disagrees though. It certainly isn't very pragmatic, and it certainly clashes with your viewpoint, but that's my view, and I'm open to suggestions on how to accommodate other viewpoints.

LOL! It's just a discussion la. What will ever come out of such discussions? Nothing really.. Maybe just the maturity and honing of thought for everyone discussing. Well, it's just you and me right now.

[Brian]

Originally Posted by Adrian Wong