Friday, May 7, 2010

The Greek Crisis

I am reading Jagdev Singh Sidhu’s article “Learn from the Greek crisis” in the Star (May 06, 2010, p B2) with much interest. Certainly, Greece has been on the verge of near-collapse – although, personally, I don't believe the EU people will let this happen – because of excessive debt build-up that has grievously impacted the economy of the country. This is something most people, companies and countries would prefer to avoid if possible. Unsustainable debt levels have broken homes, bankrupted companies and crippled a number of countries worldwide.

He writes that “continued debt build-up without finding a solution to minimize and eventually reverse the piling up of debt, no matter for what reason, will extract a high price in the future”.

I am thinking of Malaysia – it is something that the government must also deal with before our financial position gets really out of hand. Our budget deficit is already high. As the columnist highlights, “public debt as a percentage of GDP is now 54%, which is much higher than Indonesia’s 28%”. And to make it worse, we are closing in on the Philippines' 62% – yes, I do believe this is a real possibility!

Of course this scribe is making a case for trimming the subsidy bill. He should know that the government had created this subsidy monster for a broad range of stuff – electricity, petrol, flour, cooking oil, healthcare, education, and the list goes on. It is not something that you can just delete at the strike of a key. As Jagdev puts it correctly, “the removal of such subsidies will have a huge impact on every strata of society”. The fact that with 40% of Malaysian wage earners having an income of less than RM1,500 a month – any price increase or any elimination of subsidies “will evoke the most volatile reaction” (again, Jagdev’s words!). And this is at a time when the cost of living is still tirelessly pushing upward.

And then with Najib being extra generous during by-elections – things are certainly not going to look too good for the country because our money is being spent unwisely, to bribe the electorate.
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Let me end this opinion piece by repeating what Jagdev has said, that “the situation needs to be addressed because continuing the path we are on will spell trouble at a later date”. For me, it will be sooner, if the government is stubbornly reckless, lavish, indulgent, wasteful!

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