Najib – Getting It Right!

Markets expect Najib, the newly appointed Finance Minister to display solid economic stewardship than his predecessor. It goes without saying that the Kuala Lumpur stock exchange has lost almost one-fifth of its value this year to date. Ringgit Malaysia saw its biggest one-month loss since the end of the dollar peg in 2005 with GDP growth is now under threat. Job creation has reached record lows, as unemployment, particularly among young majority Malays, is high.

However, judging from his maiden policy yesterday, I think Najib still have a lot to learn and definitely he would be a good choice of apprentice if the coast looks calm. This is no time for complacency.

The ‘feel-good’ effect with the RM5bn capital injection into ValueCap will be exhausted much sooner than anyone dreamed possible and we will face an economic crisis that makes the recent experience seem mild by comparison.

Hey Dude – it is not the stock markets that ail the economy, but consumer and business confidences that are affected by global slowdown. The liberalization policy for services sector, efforts to improve foreign direct investment etc are not, if all intangible and structural and that important changes will not be an immediate gain.

At this volatile stage, we should pretense of influencing the course of events, and neither should you. Instead, we need to focus on what you must do now to protect yourself and your family from the financial firestorm that rages around us.

The more he says about ‘No Need to Panic’, I think the opposite will prevail. In my previous posting, I shared the experience of President Hoover in managing the Crash of 1959. Thus far, I cannot find single little part of his maiden policy that show clear statutory authority nor the mandate to attempt to anticipate and prevent risks across our entire economic system.

His tools are too blunt, in that exercising it would likely spur greater concern and too narrow, in that he assumes that stock market is the only one group of participants in today’s broad financial markets.