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Malaysia Today - Your Source of Independent News

It's Not A Bubble Until It's Officially Denied, Malaysia Edition

Posted: 17 Oct 2013 09:52 PM PDT


It is very difficult to completely deny the existence of a bubble in China, and even worse to say that Southeast Asian economies won't be affected by its popping. 

Jesse Colombo, Forbes

My recent report about Malaysia's economic bubble has generated quite a bit of a interest and controversy in the past few days. In addition to receiving over 45,000 views and 3,000 Facebook shares on Forbes, it made the headline of The Malaysian Insider, where it continued to spread virally in Southeast Asia.

The report received a favorable response from Lim Guan Eng, the Chief Minister of the State of Penang, who said in a press statement, "Even renowned financial analyst Jesse Colombo wrote in the Forbes online magazine that Malaysia's economic bubble will burst due to its high government and household debt."

Lim went on to say, "Interestingly, Colombo said that plans to build the tallest building in Southeast Asia, the 118-story and RM5 billion Warisan Merdeka Tower, is a major Skyscraper Index red flag." The Skyscraper Index red flag refers to a Dresdner Kleinwort report in 2009 which showed a correlation between the construction of the world's tallest buildings and the impending end of business cycles.

The report also struck enough of a raw nerve that Malaysia's International Trade and Industry Minister Datuk Seri Mustapa Mohamed refuted my assertion that the popping of China's precarious bubble economy will also pop Malaysia's bubble in a press conference in Kuala Lumpur, saying "The Chinese economy is not going to tumble. It's going to stay strong. We've seen high growth in China for many years."

"Malaysia is not going to be adversely affected. Anyway, we are focusing more on domestic resources growth and it's becoming more relevant in this context," he added.

There seems to be an unwritten rule that government officials across the world must deny the existence of economic bubbles that pose a great threat to their countries. When I was warning about the U.S. housing and credit bubble in 2005, Ben Bernanke infamously denied its existence. Officials are denying the UK's and Australia's housing bubbles, along with many other post-2009 bubbles that I am currently warning about.

I don't see how public officials' bubble denial does anything but harm to their countries' citizens. Denying the existence of bubbles does not make them disappear, but only serves to hamper the early detection process that is so critical to the survival of terminal illnesses, whether physical or economic.

I also don't see how denying the risks posed by China's massive economic bubble does any good either. I will be writing an extensive report about China's bubble after I finish covering bubbles in Southeast Asia, but for starters, they have a multi-trillion dollar debt bubble that has exploded in recent years as their government has encouraged the building of scores of empty "ghost cities" to generate economic growth.

Charts show a ballooning Chinese credit bubble:




Read more at : http://www.forbes.com/sites/jessecolombo/2013/10/18/its-not-a-bubble-until-its-officially-denied-malaysia-edition/ 

Intense campaign right to the end

Posted: 17 Oct 2013 04:02 PM PDT

The political careers of six of Umno's most prominent politicians are on the line in the contest for the Umno vice-president's posts which will be decided tomorrow.

Joceline Tan, The Star

IT is going to take a bit of adjusting for everyone to view Datuk Seri Hishammuddin Tun Hussein as a grandfather figure.

His daughter, who married at the time the Umno general assembly was taking place last year, is about to give him and his wife Datin Seri Tengku Marsilla Tengku Abdullah their first grandchild.

The 52-year-old Defence Minister will be the most boyish-looking grandfather in Umno by December.

But this grandfather-to-be has been going at the pace of a man half his age in his bid for a second term as an Umno vice-president.

The VP contest has not been this electrifying in decades.

The other incumbents are Datuk Seri Dr Ahmad Zahid Hamidi and Datuk Seri Shafie Apdal.

Hishammuddin had started out on a strong note.

But things began to seem less predictable when Datuk Mukhriz Mahathir, Datuk Seri Mohd Ali Rustam and Tan Sri Mohd Isa Samad jumped into the ring.

But Hishammuddin received two crucial boosters this week. First, Umno Youth chief Khairy Jamaluddin threw his clout behind him and, yesterday, Wanita Umno chief Datuk Seri Shahrizat Abdul Jalil gave him a sort of restrained endorsement. Suddenly, he is looking like a possible winner again.

Hishammuddin has been explaining the perceptions formed about his role as the former Home Minister in the Lahat Datu intrusions.

At one session in Terengganu, a delegate had stood up to let loose a litany of complaints.

After the event, Hishammuddin joined the man and his friends for a smoke outside where they had a long discussion.

Sometimes, simple gestures work best and when the minister finally stood up to go, the man raised his hand and shouted several times, "Hidup, Datuk Hisham!".

Umno election season is when there is a role reversal in the party – people on the ground become the VIPs and the VIPs have to humble themselves and go around appealing for support.

It is a good reminder that power comes from the people.

All suggestions of a pact among the incumbents have evaporated and the trio are running their own campaigns.

Sources said an Umno official from Pekan had asked Datuk Seri Najib Tun Razak during an Umno meeting whether the Umno president had called for a status quo vote on the VP race.

Najib had apparently said he advocates an open contest and that delegates are free to choose.

All this has added to the complexity of the VP contest, making it hard to call. It is not going to be like last Saturday where anyone could tell who would win in the Wanita and Youth contests.

Zahid aside, it will be a pretty close finish for the other two seats. Zahid has run a clever campaign, combining his tough guy image as Home Minister with that of his political image as a Malay champion. The Chinese would probably say he is enjoying some good fengshui because everything is going his way.

It is quite evident by now that the Umno establishment, namely, the top leaders as well as many of divisional heads have an affinity with the incumbents and are rooting for them.

It is not surprising because politics is very much about alliances between people who can help advance each other's career.

Ali and Isa were part of this "big boys club" in the 2009 party election. Ali was then Malacca chief minister and Isa a federal minister. Both men are in their 60s and are basically riding on their likeability and past glories.

The question is whether all this will translate into enough votes for them to make it.

Mukhriz is a newcomer to the big game and it is no secret that some of the big boys are not ready to admit him to the club.

The Kedah Mentri Besar's strength lies largely with the women and the younger delegates. Of the five delegates or so from each Umno branch who will be voting this Saturday, three or 60% will comprise the Wanita, Youth and Puteri branch heads.

They see him as representative of the change that the Prime Minister talks about. Again, no one can really tell if the cheers and applause that have greeted him reflect the votes he will get.

An intense campaign is about to come to an end.

Hishammuddin, who began his campaign by calling on the Sultan of Johor and visiting his grandfather's grave, will be back in Semborong tonight. Others will return to their respective base camps for prayer sessions and to wait for the big day.


Kredit: www.malaysia-today.net

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