AUG 12 — First off, let me begin by saying that I value your thoughts, and in an open democracy that our country tries to be, everyone is entitled to airing their views, yes, even the “youths” you seem to condescend towards in your article.
However, an open democracy also means having your thoughts scrutinized by others, which I’m sure you understand and would be more than willing to participate in, hence my response to you. Here are several points from your article which I find highly debatable:
1. Your comparisons with other countries who have also experienced a drop against the USD is inaccurate at best.
The only country that comes closest to being a valid comparison based on your reasoning of fluctuating oil prices is that of Norway. However, it is important to point out that Norway can sustain a drop in oil prices due to their brilliant economic model and the fact that their oil proceeds go directly into a sovereign wealth fund, and not directly into the pockets of ministers.
Russia as we all know are facing heavy US sanctions, the Indonesian Rupiah has always been unstable, exacerbated more by the fact that Indonesia is facing their own political problems with the election of a reformist President Widodo and his less-than-popular policies among the ruling elite. India is currently engaged in escalating tensions within it’s country due to alleged corruption (sounds familiar?), and also heightened tensions with it’s long time rival, Pakistan, and no foreign investor wants to be in a county that might be at the risk of war do they?
The Thai baht is just recovering from years of mismanagement and a political coup carried out by their general, while the Australian dollar is in decline due to poor global demand for minerals, one of Australia’s biggest exports. The Euro? They’re in the midst of their own Greek tragedy, coupled with rising leftist movements in Portugal and Spain which threatens their economic and political stability and are in the midst of imposing austerity measures. You asked if you need to go on naming countries. I suggest you do, because all your comparisons seem to be wrong.
2. Once again, you named currencies that we have strengthened against as evidence that all is not bad bad as it seems.
However, two of those countries which you mentioned is also in your first “bad list”. Is there any wonder that we are strengthening against them? Also, logic dictates that those countries currently feeling the economic squeeze of the global markets resulting in their dropping currencies will also have to scale back on imports as it is a lot more expensive in doing so, negatively affecting our exports to those countries. It is also important to note that while we gained against the Canadian dollar, this is merely a red-herring, as it does not significantly affect us.
You might as well have said we gained against the Zimbabwean dollar while you’re at it to show that we are better off. I’m sure the per cent will also be a lot higher. Considering that you mentioned over a 5-year period, and blamed others for having a “myopic” view, I would also like to point out that a majority of the issues plaguing our country were non-existent (or at least not seen yet) 5 years ago, and that the sudden drop in our currency has happened merely in the course of 1 year, which, instead of being “myopic”, is actually cause for more concern. Due to the statistical principle of regression to the mean, once you compare over a long period of time, everything will seem “normal”, yet another one of your logical flaws.
3. Your tone in the point I’m about to address was unbearably smug (at least to me), which actually prompted my response to you.
You are so quick to condescend to the “youths” of Malaysia for “not knowing” about the 1998 financial crisis because we were all “still in school”, and you speak so flagrantly about how we should always remember 1998 and compare it to then to know that we’re just overreacting to the current crisis now, but bring up points that either invalid, or have no solid backing whatsoever. For example, people were losing their jobs or had difficulty in getting jobs. May I remind you that most of the foreign capital flight currently occurring right now WILL result in the retrenchment of jobs, that due to the current crisis, coupled with global oil prices dropping, that most GLC and MNCs are incorporating cost cutting procedures and slowing down hiring processes.
“Households were squeezed”? Define “squeezed”, because if you mean squeeze as a drop in spending power, I don’t see a difference now. As the value of our ringgit drops, coupled with the current inflation (2.5 per cent as of time of writing), our households now are also squeezed, to a point in fact that the average household debt in Malaysia has now breached 80 per cent. If this is not cause for concern, I don’t know what is.
4. Finally, your list of questions to ask ourselves is laughable at best, and outright ridiculous at worst.
Just because our salaries and local trade is done in Ringgit does not mean that the USD-MYR exchange rate will not affect us. Your arrogance in saying “because my dear, only if you answer yes to the above, are you affected” is utterly misguided. Let me explain it to you, my dear. As the Ringgit drops, the prices of most goods imported in from other countries, whether it be fashion, food, or any other retail products that come from overseas brands will naturally go up, even without us “shopping from online US websites” or “flying to the US (or any other country that uses the USD) for a holiday”. We don’t import goods to be sold in Malaysia, but a lot of our retailers DO. Who do you think they’ll pass the buck of increased prices to?
Think for a moment my dear, I’m sure you’ll figure it out. Do you buy necessities from the US? Again, I refer you to my point above, and also remind you that the US is one of the world’s biggest exporters of corn-related products, and if you think we’re fine as long as we don’t eat corn, then I suggest you look up all the thousands of products that are corn and corn-oil related. We don’t need to use the US dollar in our daily lives to be affected because the US dollar is currently the world’s trading commodity, which filters down to us everyday users.
On that note, I do agree with your last statement.
The economists are not saying we’re going to die. But if you’re drawing confidence from Fitch, Moody’s and S&P; bear in mind that those are ratings that deal with the countries economic outlook as a whole, taking into account a long-term perspective of the country’s long-term health and sustainability (which is why Greece, the country now famous for being in debt,is rated at a B-, because their long-term economic outlook and credit ratings is still not an abject failure, though it will take years, maybe even decades, to repair), which says nothing about the current burdens most Malaysians are facing, and what the “youths” are complaining about.
We’re simple people, we “youths”, and while most of us do not really know or understand the underlying principles of world economy, perhaps you can take a moment to digest the fact that at least our youths are speaking up, and instead of being condescending towards them for being young and naive, that you can perhaps, in all your wisdom and experience, guide them to focus on the important things, what they can do about it in their own capacity, and make a difference ultimately.
Our youths don’t need smart-alec articles and comments telling them how dumb they are to overreact, neither do they claim to be “economic experts”, but my dear Goh Wei Liang, you don’t need to be an “expert” to care, and at the very least, they care.
* This is the personal opinion of the writer or publication and does not necessarily represent the views of Malay Mail Online.
