Lessons Of Greed Are The Hardest To Learn

Written By: Mohamed Ariff

From: NST Online

IF there is one word that could sum up why the world economy is in such a mess, that word is “greed”. From time immemorial, humans have craved to live beyond their means if they can, and strive to get what they want no matter what, some by hook and others by crook.

The inability to control one’s own wants lies at the root of consumer excess. Human wants, if left unchecked, become insatiable. Consumer satisfaction is no more than fleeting, with more wants cropping up all the time, demanding something bigger or better. What’s more, it’s all wanted today and not tomorrow.

Economics recognises that human wants have no limits, while resources do. It follows that consumers will have to choose whatever comes in reach, based on their incomes and preferences or priorities, with prices playing a market-clearing role, thereby equating supply with demand.

In other words, theoretically, human wants can be kept in check by incomes and the price mechanism.

The real world is not that simple. In a market-driven capitalist economy, instruments are aplenty to enable consumers to whet their appetites sooner by stretching affordability far above their current incomes.
Consumers do not have to accumulate enough savings before they can buy a car or a house, for they can get them all on hire purchase right away, as lending institutions accept these as collateral.

Thus, current income does not constrain current consumption, as the system allows consumers to consume on anticipated future income.

The so-called “permanent income hypothesis”, based on the present value of future incomes, fuels the human desire for excessive, not moderate, consumption. Economics textbooks tell us that the consumer is king in a market economy, where producers respond to consumer demand.

In the capitalist system, consumers are manipulated or even exploited by producers through advertisements and promotions into buying certain goods and services, with supply creating demand, and not the other way around.

It is little wonder that ad-spend the world over amounted to a whopping US$583 billion (RM2 trillion) in 2007. Easy payment schemes crafted by suppliers in collaboration with financiers pave the way for excessive consumption.

The fractional banking system and the fiduciary currency system permit excessive lending beyond the imagination of the man in the street. In the process, debts are packaged and sold in different forms and shapes, including the securitisation of debt. Thus, a dollar deposited by a saver in a financial institution can end up in loans leveraged 35 times.

What has all this to do with the ongoing global financial crisis? Everything! Financiers play a key role in this game of production and consumption, riding on human frivolity.

It is not just individuals who succumb to such temptations. Firms, conglomerates, financial institutions and even governments exhibit such traits, wanting to expand, grow and dominate, for it is after all humans who run these entities.

The United States is an interesting case in point, not only because it is the largest economy in the world and the textbook model of a capitalist system, but also because it is the epicentre of the ongoing global economic meltdown. The US economy is driven primarily by private consumption. US consumer expenditure acts as the engine of growth for not just the domestic economy but for the global economy as well, given the enormous outreach the US has through the extensive financial and trade networks it has forged with the rest of the world.

Export-dependent economies owe their prosperity in no small measure to US consumerism, as they can ride on the coattails of US consumers whose wants seem uncontrollable. The system allows them to translate their wants into demand by giving them fairly easy access to funds beyond their current earnings.

In the US, national savings are generated mainly by the corporate sector, with households accounting for no more than a small proportion of the total. Living perpetually on extended credit has become the way of life for average Americans.

They depend on credit for nearly everything, including cars, homes, consumer durables and even holidays. There was no problem with this as long as there were steady incomes to pay the monthly instalments with no major disturbance to the consumption pattern.

Mortgage has been a roaring business in all this, with banks willing to lend based on collateral. As demand rises on easy credit, the market value of mortgaged collateral increases sharply, encouraging the banks to lend even more on their strength. This goes on and on until property prices reach dizzy heights, resulting in payment defaults and bank failures. The sub-prime fiasco in the US that triggered the current crisis is a prime example.

The recent hike in the price of oil may also exacerbate the credit crunch in the US by disturbing the fragile equilibrium in the consumption pattern. Given that US cities are sprawling, cars are for many an absolute necessity, not a luxury, and the rising price of petrol forces them to spend more on fuel and less on other items, such as servicing loans.

Debt is thus the mother of all problems the world economy is facing today. And debt is generated largely by uncontrolled wants and excessive consumption, which can fuel current GDP growth, contributing inadvertently to the recurrent boom-bust cycles time and again.

Seen in these terms, moderation in consumption is key to economic stability. Moderate consumer behaviour, free from all temptations (admittedly a heroic proposition, given the frivolity of human weaknesses) would ensure stable GDP growth, albeit at a slower pace.

It boils down to a trade-off between rapid growth with ups and downs, or a slow but steady expansion.

Recessions come and go, booms bloom and wither, and history repeats itself, all because some lessons are never learnt.

The writer is the executive director of the Malaysian Institute of Economic Research

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The Wood For The Trees

Written By:  Raja Petra Kamarudin

From:  Malaysia Today

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It was not supposed to be he who gets appointed as the new Yam Tuan Besar of Negeri Sembilan after Tuanku Abdul Rahman passed on. Yes, Tuanku Abdul Rahman, the man who Jalan Tuanku Abdul Rahman, Kuala Lumpur’s once main and upmarket thoroughfare, was named after but which always gets confused with Tunku Abdul Rahman, Malaysia’s First Prime Minister and holder of the title Bapak Merdeka.

But can we blame Malaysians of limited educational background? After all, how many countries in the world still possess a Monarchy? And to have the Monarch and Prime Minister sharing the same name would probably be an incident never before recorded in the history of this world. To the more initiated, however, the Tuanku and Tunku

It is natural, however, for most people to ignore matters of little interest to them, especially if it does not change their lives one bit or helps put more food on the table. Of what concern is it to those whose only concern is where their next meal would be coming from. So we have two Rahmans running this country. And which Rahman has more power over the other would be matters that only those schooled in higher institutions of learning would be able to comprehend.

A British Minister on a visit to this country thought that Malaya was still a British colony. Maybe it was so back in the old days. But Malaya had already been given self-rule one minute pass midnight of 31st August 1957. Should a Minister be allowed to meet the Prime Minister? Yes, if the Prime Minister was a Prime Minister of a British Colony. But Malaya was not. It was already an independent nation. Furthermore, would the British Prime Minister agree to a meeting with a Malayan Minister? Is not proper protocol that a Minister meets a Minister and the Prime Minister a Prime Minister? And, to top it all, it was someone gate-crashing the office of the Prime Minister without a prior appointment.

But such was the arrogance of the British Minister who forgot that Malayans no longer took orders from Caucasians. And when he was denied entry to the Prime Minister’s office he was hopping mad. In his meeting with the Agong, he brought up the issue of the kurang ajar Prime Minister and suggested that His Majesty should sack this most disrespectful Tunku Abdul Rahman.

Tuanku Abdul Rahman was amused at the antics of this most perturbed Orang Puteh. “My dear Sir, in this country, it is not the King who sacks the Prime Minister but the Prime Minster who sacks the King.” Yes, the Agong put into proper perspective whether the dog wags the tail or the tail wags the dog. And with that Malaya probably avoided a re-colonisation or a war with Britain a la the Falklands.

And so passed on this man who can only be described as a Malay gentleman par excellence. And it was time to choose his successor to the Royal Household of Negeri Sembilan. And the son, Tuanku Munawir, was chosen to succeed the throne. But Munawir ruled for only seven years before he too passed on. And since his son was considered too young to succeed the throne, Umno stepped in and decided that Tuanku Munawir’s brother, Jaafar, should instead become the new Yam Tuan while his son, Mukhriz, was bypassed.

Tuanku Jaafar ruled Negeri Sembilan for four decades. He remained on the throne while the Menteris Besar came and went, names we can no longer even remember. But there was one Menteri Besar the Ruler could not get along with. He would never accept an invitation to any function or event if this particular Menteri Besar were also invited. And if the Menteri Besar walked into the room, then Tuanku would leave on the excuse he had to go powder his nose.

But, try as he may, Tuanku Jaafar could not force the Prime Minister to remove Isa Samad as Menteri Besar. And Tuanku had to endure many years of pain with Isa as his Menteri Besar but could hardly do anything about it. And was this not also so for Sultan Idris of Perak who wanted the Menteri Besar, Ghazali Jawi, dismissed? Sultan Ismail of Terengganu, too, suffered the same indignity when he wanted Nik Hassan out but Umno sided with their Menteri Besar over the Sultan. The Sultan of Pahang shared the same predicament when he went into a rage but could not dislodge Rahim Bakar as Menteri Besar.

Yes, Umno, and only Umno, decides who becomes the Menteri Besar. True, the appointment would have to dovetail with the wishes of the Ruler. But once appointed, the Ruler can do very little except hope that his adversary can be dislodged in the next general election. And no Ruler would commit that cardinal sin of going against Umno’s wishes by removing a Menteri Besar if he wants to continue to sit on the throne.

In the meantime, Tuanku Jaafar was getting old and no longer in the best of health and no one gave him more than a couple of years more to live. To ensure that the throne would not swing back to the Munawir clan, Tuanku Jaafar appointed his son as the Regent, basically sending a message that this was his choice of successor, his son. But when Tuanku Jaafar died, the throne went back to the son of Munawir who had been bypassed and not to his own son who he had installed as the implied successor.

But is this so weird? Did not Selangor too suffer a break in the line of succession when the political masters decided that one should be bypassed in favour of another to ensure that he who sits on the throne remains friendly to the political masters of the day? And Selangor is not the only one. Terengganu, Johor, Kedah, and many other states, also saw interference in deciding the line of succession so that the new Ruler will serve those who walk in the corridors of power in Seri Perdana.

Each state has its own system. And each state is unique. When Idris was the Sultan of Perak, it was not his son who was installed as the Regent. The Raja Muda was older than Sultan Idris that we called him Raja Muda Tua. Then the Raja Muda died before Sultan Idris did. That’s what happens when the Raja Muda is Raja Tua and so much older in age compared to the Sultan.

And that’s when Azlan’s fortunes changed overnight. From a retired Chief Justice he was now the Raja Muda. And, as fate would have it, Idris died not long after that and Azlan ascended the throne. But Azlan did something that none of the others before him did. He appointed his son, Nazrin, as the Raja Muda.

Does this mean Nazrin would now inherit the throne when Azlan dies, as he surely would one day and as all of us will as well? It was not so for Negeri Sembilan. It was also not so for Selangor. And it was not so for some of the other states as well. The Raja Muda who goes on to inherit the throne from the recently deceased Sultan is not an automatic and guaranteed tradition. History has proven that. And whether Nazrin succeeds his father is not for the Sultan to decide but depends on the grace and goodwill of Umno.

Yes, it is not the King who sacks the Prime Minister but the Prime Minister who sacks the King, said our very wise First Agong soon after Merdeka. And that has not changed one bit since. And the Prime Minister has many times in the past decided who should inherit the throne once it becomes vacant. This is how it has always been. This is how it will always be. And any Ruler worth his salt would know that your continuity lies in the hands of he who rules in Seri Perdana.

The frustration about what is happening in Perak is understandable and no one can say is unreasonable. There is talk about justice and about respect for the Constitution. But is it not the Chinese who scream over and over again that it is all about self-preservation?

This Chinese are smart. The Chinese are clever. The Chinese are shrewd. The Chinese may support the opposition but will never show it because they need to protect their rice bowl. How can we risk jeopardising our comfort and wealth by openly opposing the all-powerful Umno?

Fair statement. Reasonable conclusion. This is the Chinese ‘rules of engagement’. In fact, not only the Chinese, but also the Malays think this way as well; and the Indians even more so until quite recently when HINDRAF hit the scene.

Yes, we need to protect our personal interest. We need to make sure that what we do will not jeopardise our position. We will sacrifice for the rakyat to a certain extent as long as we do not personally suffer. But we expect others to put sacrifice for the rakyat above self-interest and that of their family.

This is called double standards. We want others to suffer for us. But we refuse to be inconvenienced for whatever reason whatsoever. When it was rumoured that 30 Barisan Nasional Members of Parliament would be crossing over there was celebration and rejoicing in the streets. But when Pakatan Rakyat Assemblypersons crossed over instead there was outrage and condemnation.

When the court rules in favour of Nizar, God has spoken, the courts are fair, finally the judiciary is independent, the judge is a great man, and all other songs of praise. When the court rules in favour of Zambry, the court is under Umno’s control, the judges are corrupted, the judiciary has no balls, and much more. The only condemnation I have not heard yet is screw God although shouts of God is Great (Allah Akhbar) was heard when things work out the way we want it to.

Yes, we rejoice and praise when events favour us or are to our liking. We curse and condemn when it is the other way around. But we will never spend even one minute of our time to analyse the issues or even read the court judgement first before expressing our emotions, which is normally extreme beyond comprehension.

Would all this have happened if Pakatan Rakyat had asked for the Perak State Assembly to be dissolved two weeks before the crossovers? Did one Umno crossover give an impression that Perak was impregnable? Was not this one crossover maybe the legendary and metaphoric Trojan Horse?

Everyone is an expert on hindsight. But we are not talking about hindsight here. We are talking about two weeks before the fact. And even when information that Vincent Tan paid RM25 million to buy out a Pakatan Rakyat State Assemblyperson was revealed, and even when Hee absented herself from Pakatan Rakyat functions on the lame excuse that she is not well, the alarm bells still did not trigger.

Sure, blame the Sultan. Blame the Sultan who also had his self-preservation to worry about just like any other Chinese, Malay and Indian who puts their rice bowl above all else yet tries to sound self-righteous when others also do the same. Blame the courts. Blame Vincent Tan whose money made all this possible. But let’s not blame Pakatan Rakyat who was complacent, refused to act even when given two weeks prior warning, had started the crossovers in the first place, and now blame everyone else except themselves.

Guus has laid a golden egg yet again

Written By: Amy Lawrence

From: The Observer

Since his arrival at Stamford Bridge, Guus Hiddink has instilled a new confidence into Chelsea

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From PSV to South Korea and now Chelsea, Hiddink has made a career out of turning under-performing teams into winners

Rinus Michels, the Dutch godfather of coaching, reckoned selecting the right team was an art form. The knack, as he succinctly put it, was to find “the right balance between creative players and those with destructive powers”.

An apparent skewing of that balance was a cause célèbre in the Camp Nou last week. The disciples of Pep Guardiola’s Barcelona stomped away after the curtain fell and duly reacted to Chelsea as if they were sucking on lemons. It was as if by tilting everything away from creative players and towards destructive powers they had committed footballing treason.

It speaks volumes for the shrewdness of Guus Hiddink that he personally attracted so little of Barcelona’s disapproval. But can you imagine, just for a moment, if José Mourinho had overseen the goalless draw which was perceived as ethically objectionable by 90,000 socios? As it was, the critics still managed to summon the spirit of Mourinho (the newspaper AS invoked him as the “devil incarnate”) as if the Portuguese peacock had in some way been responsible for Chelsea’s formidable gameplan. In a way, of course, he was. Any team with a spine of Petr Cech, John Terry, Frank Lampard and Didier Drogba remains forever the team that José built.

Hiddink provokes nowhere near the froth value that has always been a Mourinho speciality. It is practically impossible to get as worked up by Chelsea’s current chief. He is an expert at taking the heat out of situations, at sounding reasonable, amenable. He knows when to push buttons, but also has a gift for turning potential critics into putty when he feels the occasion demands some anti-septic.

Now imagine if Mourinho was the man with the Chelsea microphone during these in-between days separating the two acts of the semi-final. Fun as the tongue twisting might have been, Hiddink’s approach has been to politely deflect away accusations by offering Barça a backhanded compliment. “If we were forced to play as we did it’s a credit to the opponent,” he says calmly, patiently, for the umpteenth time last week. “But I don’t want a team who says: Okay, we cannot achieve what we want to achieve so please take our wallets and run away with them.” Fair enough, no?

Few managers have such an instinct for figuring out when to jab, when to retire to the ropes, when to unleash a ferocious uppercut. Hiddink has been doing it his entire career, which is why he is a knockout master.

His professional life has been punctuated by some extraordinary sudden- death experiences. It is more than 20 years since he guided PSV Eindhoven to victory in the European Cup. Amazingly they slugged it out in the quarter-final, semi-final, and final without actually winning a game, and only scored twice in those five knife-edge encounters. That was enough.

Bordeaux and Real Madrid were both speared by a solitary away goal, and a goalless final against Benfica was claimed on penalties.

Fast forward a decade and Hiddink was Holland manager and on the verge of taking his country to the World Cup final. This time the penalties rolled against him after Holland had put in a splendid performance against Brazil in the semi-final.

And that extreme contrast is why Hiddink is so hooked by matches of this nature. “I don’t want to be on the wrong side of the knockout,” he says pointedly, mind rewinding to the torment inflicted by Brazil. “The knockout is special circumstances where you can give or take the punch. It’s so tight. So tight.”

Does the pain of defeat last longer than joy of victory?

Hiddink cannot help but break into a wry smile. “That’s a nice question,” he muses. “I think so. If you are outclassed after a few days you can accept it. But if you are quality-wise better than the opponent and you are kicked out, it hurts more.”

Hiddink’s reputation owes much to the fact he has doled out so many heavyweight punches since that nadir in 1998. In creating a South Korea team capable of beating Italy and Spain en route to an unprecedented World Cup semi-final, in dragging Australia to the 2006 tournament at Uruguay’s expense, in delivering one of the most complete international performances of recent years as Russia dismantled Holland at Euro 2008, he thumped out miracle after miracle.

The three nations whose football cultures he revolutionised are all, in their own way, somewhat stubborn. Yet they all fell for him in a big way.

He is a near deity in South Korea, where he was only half-jokingly proposed as a future president. The Australians, who view sporting excellence as a birthright, wore T-shirts with the slogan “In Guus We Trust”. In Russia he is highly regarded enough for it to be a matter for the Kremlin if Chelsea wish to try to hold on to their loan manager beyond May. That doesn’t happen without a talent for transmitting your ideas in a way that is irresistibly smooth.

What Hiddink does so perceptively is measure the temperature of a situation and then manipulate it. A striking example of this occurred when the Australians employed him to negotiate the terror of a play-off against Uruguay with a spot at the 2006 World Cup finals on the line. The team, famously, had endured a play-off disorder for years up to then.

He won over the players instantly by being bold and charismatic (he took them all to meet Diego Maradona in Buenos Aires for inspiration), yet recognised what they needed was not somebody to challenge them, but to preach coolness to best use their natural bullishness.

He impressed everyone with his handling of a volatile atmosphere in Montevideo. Arriving in Uruguay to a hostile reception, the television cameras crammed around the plane hoping for a grenade to heighten the tension even more. “I just want to say how proud I am to bring a team to the first country to hold the World Cup,” announced Hiddink. The Uruguayans were completely disarmed and the atmosphere diffused. Australia mastered their nerves to win on penalties.

The captain, Mark Viduka, was bowled over by Hiddink: “As far as I am concerned, Guus was the missing link for us. He was the leader we needed to take us to the World Cup. He is a tactical genius. Everything he does has a purpose and it makes you feel so comfortable as a player.”

Hiddink achieved amazing results in the same way with South Korea. He tried all sorts of tricks to teach an inexperienced bunch how to feel assured enough to punch above their weight. That entailed a global tour in advance of the World Cup to make the team more robust. He realised how inappropriate it was for them to traditionally warm up for a tournament with a round of matches against the likes of Singapore and Malaysia, who they could beat fairly easily. It was time for a massive shock to the system.

Pitchside in the stadium at Daejeon just before South Korea so famously humiliated Italy, Hiddink explained how he produced such a monumental improvement. “In the beginning they were so innocent. I thought, ‘I love you but I could kill you, the way you play so naively.’ That’s what I emphasised,” he said. “We made a programme to play in Europe, to invite European and African teams here, and then we went to South America. Because there you get streetwise.”

By his own admission, he was sometimes “mean” to the Koreans in training to provoke a reaction. At other times, when they were expecting to sweat, he sent them off to spend time with their families. “When I first came up with that everyone said: ‘No, no, no! What will the press say?’” Hiddink raises his middle finger as an answer. “From the start I said if you hire me to get the team ­competitive, these are the consequences. I might fail, but I’d like to fail my way. I’ve not come to fail here your way.”

Failure is not something that has cropped up for Hiddink. Now he has a huge match against Barcelona on the horizon and will be psyched up. “I hope to be inspired,” he says, taking a break from the daily regime at Cobham that has invigorated him more than he dares to admit in the past months. “Every day I like to do this job being with the guys on the training ground, but, of course, these games give some extra tension. You’re even sharper than you are normally and I normally want to be very sharp.”

And has preparation for the Barça rematch involved practising penalties? “Not long sessions. but every now and then we do,” he says. “Another 0-0 might be possible, and we’ll look which team was playing defensively.” Now that would be touché.

It’s funny to recall how nobody imagined Avram Grant would be retained at Chelsea even if he won the Champions League. Now, everybody wants Hiddink to remain even if the European campaign ends potless. This is not an act that will be easily followed.

He remains steadfast that his main job with Russia is sacred. Every time he meets anyone with a notebook or a TV camera they are obliged to ask him just in case anything has changed, and the latest inquisition just made Hiddink smile, lift up the paper cup of water in front of him, and say: “Cheers.”