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Wrong Medicine & Treatment For A Dying Patient - 2nd Finance Minister of Malaysia Has No Reasons To Gloat When The Western Economies Adopted Some of Malaysia’s Medicines To Overcome The 1997 Crisis - By Matthias Chang (LATEST UPDATE - 7/12/08) By Matthias Chang
Sunday, 07 December 2008 22:21
Since August 2007, I have been analyzing the various measures adopted by the US FED, the central banks of Europe and the Bank of England. I have also kept track of almost every public statement made by Bernanke, Paulson, the Governor of the Bank of England and the President of the ECB.
I am appalled by their failures to prescribe the painful medication and surgery needed to treat the disease and the total intellectual bankruptcy of their advisers – the Nobel Laureates in economics for not owning up to their sordid role in releasing the most virulent financial bug into the financial system. This bug has ravaged the entire system which has been sustained in the last four decades by a drug addiction – the constant use of fiat money.
Equally disappointing was the stupid statement from Malaysia’s 2nd Finance Minister, following the bailout of distressed banks and other financial institutions by the US and European central banks. He boasted that the West was now doing what Malaysia had implemented during the 1997 financial crisis. This idiot ought to realize that the US and the European central banks were prescribing the wrong medication to the patient.
Let me explain. In 1997, Malaysia and other ASEAN member countries were attacked by hedge funds and speculators. Malaysia, to use an analogy which Americans will understand, “circled the wagons” to protect itself from the raiding financial predators. The global mass media, controlled by the Money- Elites embarked on a massive campaign to discredit Malaysia and the then Prime Minister, Dr. Mahathir Mohamad by labeling Malaysia’s defensive strategies as “bailouts” and that the country was protecting cronies!
What Malaysia did, which angered the global Money-Elites, was to tell these predators that we will not allow them to acquire and plunder our nation’s financial crown jewels at basement bargain prices.
Our actions were not “bailouts”.
Therefore, to equate Malaysia’s strategic policies to defend our economy from being plundered with the current stupid measures by the FED and the US Treasury shows that this idiot of a finance minister (albeit, second in rank) did not understand Tun Dr. Mahathir Mohamad’s policies and has inadvertently punctured the self-created myth that he was in fact the architect of the policies.
Shame on him!
If I may use another analogy – a medical analogy, which I hope this idiot as well as Bernanke, Paulson and other central bankers will understand. I used this analogy in November 1997 when advising my clients. Malaysia was “attacked and suffered major wounds – severed arteries. This caused massive bleeding. Initially we could not identify which artery was the most critical. But once we identified the same, we proceeded to stopped the bleeding." Malaysia was bleeding financially, and the exchange and capital controls were the main measures that stopped the bleeding!
In the 1929 / 30s depression, the patient suffered a massive stroke. Treatment for a stroke cannot be used for the present crisis.
What we are witnessing now is that the global economy (i.e. the body) has suffered multiple-organ failures – heart, liver and kidney. The financial equivalents are as follows:
1) The Banking System Collapse (most of the banks are bankrupt) – the insolvency of the financial giant, Citigroup is the microcosm of the banking system.
2) Insurance Industry Gridlock – AIG is the microcosm of the industry. Its collapse and the unraveling of the credit default swaps (CDS) have caused havoc in the ratings and valuations of assets.
3) The Hedge Funds Debacle – G.E. Capital, the financial arm of General Electric, the pride of Jack Welch is the microcosm of the industry. It is insolvent and is being guaranteed by the FED to the tune of US$136 Billion.
What is the principal cause of this sudden multiple-organ failure?
Simple!
It was the massive overdose of fiat money (the drug) in the financial system compounded by the use of an infected syringe – the infection being caused by the most virulent bug in the history of mankind – the derivative casino.
Therefore, the cure must entail no less than a transplant of the relevant organs. But before we do that, we must get rid of the bug that has infected the entire body. For if we do not get rid of the bug, any transplant of a healthy organ will be infected by the bug in no time!
First thing first! Get rid of the bug (shut down the entire global derivative casino) then replace all the malfunctioning financial organs – the FED, IMF, World Bank, hedge funds and the US dollar reserve system – with new organs (new financial institutions).
To hammer home the point, I will use another analogy (courtesy of a banker friend) one in which war mongers and Bush neo-cons will understand – weapons of mass destruction (WMD).
Bush and his warlords went to war – invading Iraq and Afghanistan in search of weapons of mass destruction, but found none. Not surprising, because at all material times, the WMD was sitting right at home, in the backyards of USA and “Great Britain”. What is this WMD – it is none other than what Warren Buffet warned in his Annual Report to his shareholders – the derivatives casino!
This WMD is more powerful and devastating than any nuclear bomb invented by mad scientists.
This WMD was also invented by similar mad scientists – the Nobel Laureates in economics who labeled their specialty “economics science” and who together with unemployed physicists and discarded mathematicians (there were plenty at the end of the Cold War) invented the various financial models on volatility and the pricing of options etc. such as the Black-Scholes, ARCH and GARCH models. These models, referred to as “sophisticated financial engineering”, fueled the lust and greed of the Money-Elites of Wall Street and Thread-Needle Street, the financial heart of the City of London.
Obviously, we cannot be treating the patient from such a WMD fallout as if it was suffering from nuclear radiation.
My friends and visitors to my website can vouched since 2006 that I have been more than confident in forecasting that a “global financial tsunami” (a term which I first coined in 2005) would devastate the entire global economy. I have repeatedly stated why the financial mess will get worse because I was certain that the wrong medicine was being given to the dying patient.
I have however resisted in offering the right medicine to the dying patient for the simple reason that I wanted to see how the Nobel Laureates in economics perform their magical skills. After all it was their silly financial models on pricing and volatility and other exotic inventions that were responsible in convincing the sophisticated gamblers of Wall Street and other financial centers to throw caution to the wind and plunge head on into the financial black-hole! They were so arrogant that they referred to themselves as “Masters of the Universe”. This reminds me of the arrogance of the builders of Titanic. They also boasted similarly that not even God could sink the Titanic. On her maiden voyage, she was destroyed by a mere iceberg!
Some of you may consider the above statement arrogant. I offer no apologies. My simple rebuttal is this – if these Nobel Laureates in economics are so clever in creating models that can forecast and or track volatility in order to make billions at the derivative casino, how come they cannot see the huge wave that became the global financial tsunami?
Nobel Laureate Myron Scholes who founded the hedge fund, LTCM which collapsed disgracefully in 1998 was also the inventor of the Black-Scholes model. His other financial toy, the hedge fund “Platinum Grove Asset Management” declared insolvency in November 2008!
Even the Managing Director of the IMF recently admitted that the financial devastation surprised him and that he was unprepared for it! And these are the experts tasked with managing the global economy.
What about the gathering of the G-20 nations on November 15, 2008 in Washington? What wise pronouncements did they make and what tangible solutions did they offer to the world?
Nothing but empty sound bites!
The same rubbish was offered at the APEC Summit. Our poor Najib, the Deputy Prime Minister and Finance Minister (having been given the poison chalice by Badawi) could only utter some nonsense that we must ensure free trade and avoid protectionism as if that would be the cure all.
These high-level gatherings of political leaders and their communiqués reflect their complete intellectual bankruptcy, as the leaders were desperately trying to show that they are in control and providing the necessary leadership. The Bush-Sarkosy–Brown pantomime was staged purely for their respective domestic constituencies.
The numbers reported by the global mass media – the US$ trillions “pumped into the banking system” to cure the sickness (US$8.5 trillion thus far by the FED) – are so ridiculous that only an idiot would believe that a bankrupt (USA) can have money to rescue itself and or to rescue other bankrupts!
Like magic, monies were created out of thin air, by the mere punching of digits of the keyboards into the FED computers:
1) $100 Billion to buy debts from Fannie Mae and Freddie Mac;
2) $500 Billion to buy the said agencies’ mortgage bonds;
3) $200 Billion to guarantee securities-backed student, auto, small business and credit-card loans;
4) $25 Billion to capitalise Citigroup;
5) $306 Billion in guarantees for Citigroup’s toxic assets;
6) $30 Billion more to salvage AIG;
7) $700 Billion bailout monies approved by Congress; and
8) $Billions more in the pipeline!
Can bankrupts guarantee the debts of other bankrupts? This is exactly what the con-artist Paulson of the US Treasury is doing in collusion with Bernanke at the FED.
This is so stupid and yet we read every day in the global mass media and financial dailies that Bernanke and Paulson have the solutions!
Their solutions are mere digits and toilet papers!
Why is it so difficult to understand simple truths? One need not have a PhD to see through the con-game. I like to call such experts with such academic titles as “phoney donkeys” and the lesser MBAs and MScs as “Master Bullshit Artists” and “Master Screwed-Ups”.
Thus far, we have witnessed nothing but the game of financial musical chairs.
Big Bankrupt A has a unique printing machine that prints proprietary toilet papers and passes them off as money and denominated in the US$ Billions. Big Bankrupt A then lends them to fellow bankrupts such a bankrupt B, C and D (financial institutions). Notwithstanding the massive loans of toilet papers / digits, Bankrupt B, C and D could not liquidate all their debts as their liabilities are in the US$ Trillions.
To hoodwink the naïve creditors, Bankrupt B, C and D entered into a conspiracy to exchange their useless “assets” i.e. CDOs, Synthetic CDOs, CLOs, CDS, ABCPs (worthless papers) for more toilet papers from Big Bankrupt A via schemes such as TARP (Troubled Assets Relief Program) and TALF (Term Asset-Backed Securities Loan Facility) to pay off the mounting debts.
When ten-year old kids are smart enough to refuse dud notes in payment for errands, it is utter stupidity for central banks in Asia, the Middle-East and Latin America to partake in this con-game and accept duds as full payment for the debts of bankrupt A, B, C and D.
Sooner or later even these fools at the central banks of Asia and Middle East will have to pause and think through whether it is to their advantage to continue playing fake money musical chairs with the FED and US Treasury.
To sum up, when the patient was put into intensive care because of a massive overdose of drug, is giving more of the same drug the right treatment and or medication?
At the present moment, we can see that as a result of the multi-organ failure, toxic wastes in the system cannot be processed and discharged. For assholes, who at this point in time still do not understand or continue to deny the severity of the situation, just imagine that you cannot empty your bowels and this condition has been going for months. How do you think your body will react?
If the good doctor cannot drain the waste out of your body, you will surely die! This is no brainer. The entire global financial system is filled with toxic wastes (the CDOs, CLOs, CDS etc.) up to its eyebrows and the system is screaming - “Get this bloody shit out of me, for God’s sake!” And like the typical doctors who habitually misdiagnose the sickness and refuse to admit their gross negligence, the political leaders refuse to act, for to do so would be an open admission of their negligence and expose them to legal action or worst, criminal prosecution and imprisonment.
Yet, our stupid Governor of Bank Negara tells the world that the situation in Malaysia is under control. And this has been echoed by the Prime Minister and his deputy. It was only just recently that they are recognizing the severity of the crisis and that timely actions need to be taken to rectify the situation. But their viewpoint is still that of a normal business-cycle crisis – the boom and bust type every ten years or so.
Even then our leaders do not have any ideas as to how to resolve the problem other than saying, “we will stimulate the economy, increase consumption and ease interest rates”.
Let me say it here and now. These are not the solutions. These are the wrong treatment and medication.
These are not the solutions, because these idiots have not understood and appreciated the financial consequences to Malaysia of the financial multi-organ failures of the US-UK dominated global financial system.
It is beyond their intellectual capabilities to think out of the box. The most that they are contemplating is that maybe, just maybe Malaysia will suffer a mild recession. This has been the public pronouncements of the Prime Minister, his deputy, the 2nd Finance Minister and the Bank Negara Governor.
The captains of industry and the so-called corporate leaders are similarly out of tune and they are still planning how to milk the money-machine to their advantage when Najib takes over as Prime Minister in March 2009.
Come March 2009, it will be too late to put in place the necessary measures to protect key industries and or to prevent massive disruptions to the economy.
This is getting ridiculous as even the leading financial commentators have now conceded that the crisis will be the worst ever in modern history, worst than the great depression. But we have idiots in Malaysia talking about recession.
I have warned Malaysia and visitors to my website of the crisis since 2006. No one took notice. And we have the solutions. But these solutions cannot be implemented unless and until certain conditions are in place.
The following pre-requisites are essential and critical if Malaysia is to succeed in overcoming the crisis. They are as follows:
1) The Trinity of Power is completely out of power and has retired overseas;
2) The 4th Floor Boys at the Prime Minister’s office are declared persona non-grata;
3) The Governor of Bank Negara resigns;
4) The 2nd Finance Minister resigns;
5) The members of Ethos Consultancy are removed from any role in future decision making of any new administration;
6) Tun Dr. Mahathir Mohamad is invited to play a decisive role in any future administration.
By all means accuse me of being arrogant and conceited in demanding the above conditions. Seriously, do you really think that the Badawi regime can be trusted to solve the crisis? Please tell me who in this country have been warning repeatedly since 2006 of this global crisis?
Badawi was sleeping. And everyone in his regime was infected with the sleep disease, even the government and private think tanks. There were no exceptions.
Pose this question to yourself and your family: If one of your family - your wife, husband, child, brother or sister is seriously ill and needs to be admitted to intensive care, but the doctors, all of them on duty at the hospital and even the consultants have been assuring you for over two years that all is well and that the normal treatment and medication (whatever that means) will be sufficient, what will you do when another doctor having studied the symptoms have repeatedly told you that it is organ failure and this has been confirmed by other doctors as well?
Would you:
1) Still trust the care and the recovery of the patient to these idiotic doctors?
2) Engage the doctor who correctly diagnosed the illness to treat the patient?
3) Transfer the patient to another hospital?
4) Want to waste more money, paying for hospital fees when the patient is not getting the right treatment?
5) Think that the doctor who was correct in his diagnosis would want to treat a patient if he or she has to submit to the authority of these idiotic doctors?
6) Procrastinate, if the window of opportunity to take effective steps is a mere three months or less, failing which the patient will die?
I am now going to share with you one of the consequences arising from the financial multi-organ failure, as this alone is sufficient to devastate our entire economy.
It is this: our foreign reserves will be vaporized and if we are lucky, whatever reserves remaining may fetch 50% or less of its original value. This will happen when the dollar collapses in 2009 at the earliest or early 2010 at the latest!
How will such an event impact on our economy? Have we stress-tested such a scenario?
There are other scenarios equally devastating, all of which will take place. These idiots cannot even imagine such a scenario, because they are too steeped in the Washington Consensus and brainwashed by the economics of the Chicago School and of late the nonsense of the Nobel Laureates like Myron Scholes, Robert Merton and those economists who consider themselves “Master of the Universe”.
You may think this is just too far fetched. Fine by me! I have done my research. Do yours now, before you condemn me as a conspiracy theorist. I have been proven right so far. What has been your track record? If you have been sleeping just like Badawi and his entourage, I hope you will wake up in time. They have thus far screwed up big time.
You have to make a choice – just like any parent whose child is critically ill and is about to die. You bear the ultimate responsibility for his / her life or death. And as a citizen, the same responsibility lies with you to determine the life or death of your country.
Join me in demanding the above six conditions to be effected immediately by the Barisan Nasional government. Time is of the essence!
Personal Comment.
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