2010 national debt at RM407b: what are the implications in layman terms?
Everything in Malaysia will be owned by the foreigners because of the chain-reaction; the banks will be owned by foreigners, thus all those who borrow or depend on the banks; the loans, the business, the business ventures, homes, houses, properties, land and shares (they bought from bank loans) will all be owned by the foreigners.
Nawawi Mohamad, The Malaysian Insider
The national debt consists of internal debt (owed to lenders within the country) and external debt (owed to foreign lenders). Governments usually borrow by issuing government bonds and securities (IOU documents) and simply borrow directly from local money institutions.
Repayments will then be made based on a schedule and periodical timeframe that will determine when the repayment or instalment is due and the quantum plus interest and the promised dividends.
As long as the payment schedule is met, everything is fine but when there is a default (the government not able to pay as scheduled) it is the first indication of when the situation is beginning to turn bad. The next step is to re-schedule the payment, make the repayment amount lower by making the period longer and increase the interest which otherwise the lender will not agree. They want more money at the end of it. The whole process is similar to the Ah Long business but with all the formalities and legalities in place.
Next, if the situation gets worse, the government has to borrow more money to pay the instalments. The Malay phrase for it is “gali lubang, tutup lubang”. This is what in fact is going to happen now.
With the ever increasing budget, unmitigated wastages or leakages and slow growth, default in payments to the lenders is imminent.
Slow growth means the overall economic activities and productivity is low which in most part is directly influenced by the world economy. Even if I am wrong, why wait until the time comes when the Umno/BN government can do something about it now?
The Umno/BN government must start the austerity drive now before it is too late. It must reduce spending now when there is still room to manoeuvre. It is a tactical retreat; not to lose, but a necessary move to win. By the time when Malaysia needs some foreign funds to survive like Greece, it would be too late. By that time there will be mayhem. Everything in Malaysia will be owned by the foreigners because of the chain-reaction; the banks will be owned by foreigners, thus all those who borrow or depend on the banks; the loans, the business, the business ventures, homes, houses, properties, land and shares (they bought from bank loans) will all be owned by the foreigners.
