Najib The Ponzi Scheme Master
Malaysia is close to bankruptcy.
The government has no more money. 2009 must have been a horrible year with little corporate taxes collected (and expected to be collected) due to the economic slowdown. Foreign investments have also slowed to a halt.
And yet Najib’s government is trying to spend their way out of the economy. Honestly, if carried out well, government spending is a key component in driving the economy up. But not in Malaysia. The leakages are too large. As a result, the expected multiplier effects do not maximise. The money disbursed end up in the pockets of those who least deserve it instead.
2009 must go on record as the year with the largest amount of government bonds issued. Amanah Saham this and Amanah Saham that. I don’t have the statistics but I doubt 2009 will be too far off the numero uno spot even if it does not take the top spot. All sorts of bond were raised and for the first time, take-up quotas drawn along the usual racial lines have been removed.
What does that mean? The government is simply desperate for money. The amount that they could raise from the protected and preferred Malay race have simply maxed up. That left Najib with no choice but to loan from the desperate Chinese and Indians on the pretext of equality and sharing of wealth with all in the country. And at lower rates of returns too.
Malaysians are not well read people. And I bet you that most people do not understand what a bond is apart from it being an investment opportunity that generates interest income higher than that offered by FDs. Bonds are actually IOUs. It is a loan. When you buy a bond, you are actually lending money to the bond issuer and you get paid back upon maturity.
Upon maturity, paying back of bond money is an issue should the bond issuer (in this case the government of Malaysia) has no money to pay. But as the government, this can be solved via a few simple strategies at the expense of the rakyat.
