Analysing the analysis: Will the people stick with Najib in next GE?

 The conspiracy theorist and the voters who could not take yes for an answer.

Do governments lie about the magnitude of economic problems Governments are unwilling to tell the truth about the magnitude of the economic problems, the lack of solutions and cost of possible corrective actions to the electorate.Politicians have taken regard of historian Simon Schama’s comment that no one ever won an election by telling voters it had come to the end of its “providential allotment of inexhaustible plenty”.. Ordinary people are complicit; refusing to acknowledge that maybe you cannot have it all.This was a wave. In retrospect the 2013 verdict was an enthusiastic splash. Neatness tends to descend quickly on elections once they are over. It becomes immediately clear to analysts as to what happened and why. And yet, this time around, the results are of such a scale that even the most determined television panelist might take a pause to process what has just happened for it confounds all expectations and makes all previous analyses look faintly ridiculous.There are a number of factors that need to be taken into consideration that may influence the results of the 14th general election, which has to be conducted on or before Aug 24, 2018, two months after the Parliament dissolves automatically on June 24.

  Najib found  huimself embroiled in one scam after another,he tried to divert public attention by Umno playing race card to deflect RM2.6 billion donation, 1MDB issues

Najib’s challenge today is that his biggest opponent today is none other than the memory of Najib 

he Najib can offer nothing very new. The speeches are still as powerful, but by now he has spoken on every subject

Najib’s rule produced the achhe din (good days) promised during his election campaign?

5% kickbacks were standard in government contracts. Infrastructure companies that paid up were seen as politically well-connected, and once enjoyed skyhigh share prices lambasted crony capitalism.Other critics say economic liberalization has enriched only cronies through monopoly profits from political allocations of land, minerals and spectrum.. Alas, even after paying up they often did not get the promised clearances, so many today are bust. That’s not monopolistic cronyism.

Now  corruption is rampant. But I distinguish between crony capitalism and political protection rackets. The former bestows monopoly profits on cronies. But if after paying up, the businessmen get no monopoly or abnormal profits,  the new AG becomes Najib’s protector, not predator

 it’s a protection racket.also read this Najib taming our deathly A-G office with Najib's puppet Mohamed Apandi Ali as A-G

 Combat Corruption and Cronyism urges for MACC's advisory panels to engage with anti-graft groups.read this 'Don't keep M'sians in the dark over ongoing MACC probe'

 for every new law we should abolish 10 old ones. This admirable sentiment expressed a golden rule of good governance — create a minimum of sensible laws and enforce them fully. Don’t create a pleth ora of laws that overwhelm administrative capacity and remain unimplemented.

 the folly of constantly creating new rules that, even if desirable, cannot be implemented. A plethora of rules leads only to mass evasion, corruption and cynicism. Rules that people will not observe and the administration cannot implement simply criminalize the whole population. Should we divert scarce administrators, police and courts from the most urgent tasks‘ 1MDB chief  makes more political statements than some politicians Arul behaves more like a politician than CEO

Alas, this principle is not being followed today. Consider the new anti-smoking regulations. The government proposes to ban the sale of loose cigarettes and raise the age of those who can buy cigarettes. But loose cigarettes account for 75% of all sales, at maybe a million outlets.Will the government appoint an army of inspectors to check loose sales by every cigarette vendor? Will another army check the age of every person buying cigarettes?There’s an old British saying, do not bring the law into contempt: that erodes voluntary observance of rules, which is far more important for a healthy society than stern police enforcement. Any legislature that enacts new regulations must also provide additional staff and finances for implementation. If additional staff and finances are not available or affordable, it is usually better not to have the new rules at all. Unimplementable rules mean mass evasion, rewarding law-breakers over law-abiders. Cigarette dealers will pay off the police to ignore the loose-cigarettes ban, so corrupt cops will be the only gainers from this supposedly noble rule.

 Najib must return to his election pledge. For every new rule, he must abolish 10 old ones, opening up administrative space. Good governance means fewer but critical rules, well enforced.

Lee’s philosophy minimum government, maximum governance —  learn from Lee? First, he is doing nothing to create an efficient police-judicial system. Second, his Make in India scheme has a protectionist touch. Third, he shows no hurry to catch and jail influential people for corruption. Fourth, he has done surprisingly little to improve the ease of doing business. Lee in his grave will frown at such a large unfinished agenda.

When Lee Kwan Yew became Singapore’s first prime minister in 1959, its per capita income was $400. Today, it is $55,000. No other country has gone so fast from rags to riches.

 A badly governed country will always be easy prey for outside dominators, but not a well governed country. , Lee could see that the biggest threat to freedom and prosperity came not from western imperialism but communist imperialism, and so developed close ties with the US. The Soviet collapse in 1990 vindicated him.

Lee did not follow laissez faire. For him, good governance included massive public, social and physical infrastructure that was world class, facilitating productivity and private enterprise. The biggest Singapore companies in his early years were government companies building power stations, ports, roads and water supplies. Socialist India did a lousy job in physical and social infrastructure: it focused instead on massive (and woefully inefficient) public sector manufacturing, especially in steel and heavy industry.

"Bravo, Tun Dr Ling Liong Sik!" "You have won the first round of the battle (in the court of public opinion) with Prime Minister Najib Abdul Razak read this PM vs Ling: Is the court trying to avoid embarrassment ...

Absolutely not. The finance minister has made a solemn commitment, and his credibility is at stake. Losing that credibility is bad policy. Indeed, reduced credibility can hit the cost and volume of private investment far more than any ‘crowding in’ of investment that the analysis touts.Compounding these problems is the misuse of the  by successive governments to harass foes and protect friends

Most of 1MDB’s debts settled with asset sale: Najib    read this Most of 1MDB's debts settled with asset sale: Najib, AsiaOne ...

An avalanche of dollars exiting China threatens to smother all emerging markets (EMs), including India, and cause a global recession. Almost $ 600 billion have exited China in the last six months, a mammoth $100 billion per month.This would have emptied the forex reserves of almost any other country, but China still has $3.3 trillion left. However, it cannot afford a continuing outflow at this rate.

Its government placed curbs on stock markets to combat crashing values, but withdrew these when they proved ineffective. It is committed to making the yuan a reserve currency like the dollar. But this obliges it to allow capital to enter and exit reasonably freely, and hence risks further capital flight. For decades the Communist Party has firmly controlled the economy. But no more.

Standing firm: While BRICS partners Brazil and Russia are in recession, India has been more resilient. But for how long?

The Chinese avalanche has helped accelerate dollar outflows from all EMs (emerging markets). The Sensex is down from 30,000 to 24,400. The rupee has gone from Rs 62 to Rs 67.70 to the dollar. Yet India is the best EM performer: others are truly battered. Worse, the prices of oil and other commodities keep falling, a recessionary portent.

China has been slowing for two years. Pessimists like Ruchir Sharma of Morgan Stanley have long worried that total debt in China, induced by government stimuli, has shot up from 150% of GDP to 250%. History suggests that this will end in tears. The pessimists sneer at official Chinese figures showing almost 7% growth. Using alternative indicators like electricity consumption and rail freight, they argue that true growth could be just 4-5%.

However, optimists like Nicholas Lardy of the Peterson Institute say China is simply rebalancing its economy. Earlier, growth was driven by industrial exports and investment. But now China wants, correctly, to switch to an economy driven more by domestic consumption and services. This means slower GDP, but 6-7% growth is very respectable for an economy that in PPP terms is now the largest in the world. The optimists say indicators like rail freight and electricity may suggest slowing industry, but that is exactly what the Chinese government aims for by emphasizing services. So, the optimists say, there is no crisis, just sensible rebalancing.

Six months ago, one could take either view. But now the Chinese are voting for the pessimist’s version through capital flight. Individuals can remit $50,000 a year abroad. Some Chinese companies are investing abroad. But over half the outflow has a political explanation.

The fleeing billions are probably the ill-gotten gains of former Communist Party officials and their super-brats (often called “princelings”). They are being targeted by Communist Party chief Xi Jinping for corruption. Former security chief Zhou Yonkang and his colleagues have been arrested. Xi’s predecessor, Jiang Zemin, and his two sons have been placed “under control”, suggesting they may eventually be arrested. Xi is perhaps targeting the entire top leadership of the Jiang era. The resulting political struggle could have serious economic consequences.

Meanwhile Global Economic Prospects (GEP), the World Bank report on the world economy, has flagged the risk of a coming recession. The bank is too political (all its members are governments) to actually predict a recession. So, GEP forecasts world GDP growth rising from 2.4% in 2015 to 2.9% in 2016, and says the chances of a recession are low. But it then admits that EM growth has fal.len below forecast levels for years. It says that if in 2016 the EMs underperform as much as in 2010-14, and if financial panic like the “taper tantrum” of summer 2013 recurs, then global growth could collapse to just 1.8%. This will be below the 2% widely used to benchmark a global recession.

Ultra-low interest rates in advanced economies have in recent years led trillions of dollar

In the 2000s, China accounted for half of all incremental world demand for commodities. Its slowing has caused the global demand for — and price of — commodities to collapse. Oil is now under $30/barrel, one-third of its rate in 2014. Cos to flow to EMs in search of higher yields. A return to normal interest rates in advanced countries could induce a huge reverse flow out of EMs. That process seems to have begun with the raising of US interest rates.mmodity exporting economies are in dire straits. Brazil and Russia are in recession. Many Asian manufacturing economies are part of global value chains using China as an assembler, and have also been hard hit by China’s slowdown. India has been a resilient exception since it is a net commodity importer, and is not part of world value chains. But if the world falls into recession, India will be dragged down too