Khir Toyo berani ditahan berdemonstrasi, Khairy cuma pelakun banyak auta!

Jurublog menerima pesanan ringkas memberitahu Dato Seri Dr Khir Toyo telah ditahan Polis Pulau Pinang kerana terlibat dalam perhimpunan haram anti Karpal di rumah Karpal Singh di Pulau Pinang.

Dr Khir telah ditahan oleh polis di hotel penginapan Hotel Waterfall bersama pembantu-pembantunya dan Ketua Pemuda Umno Permatang Pauh, Mohd Zaidi Mohd Said. Turut sama ditahan adalah beberapa Ketua Pemuda Bahagian Tasek Glugor dan Kulim Bandar Baru.

Demonstrasi itu dirancang oleh Pemuda UMNO Pulau Pinang untuk memprotes tindakan Karpal Singh untuk menyaman Sultan Perak. Seramai 500 penggiat Pemuda Pulau Pinang UMNO telah berarak sejauh 1 km dari Youth park Waterfall ke rumah Karpal Singh di Taman Botani.

Demonstrasi haram ini ada berlaku insiden hingga menyebabkan polis terpaksa bertindak. Barulah berani dan tidak macam setengah orang itu yang hanya curi peluang untuk populariti tetapi sebenarnya penakut masam.

Orang tersebut yang merupakan mendapat Naib Ketua Pemuda secara menyuruh pesaing layan undur sering terpibat dalam pilihan calun dan berkempen tetapi pengibatan dan kehadhirannya hanya mengalahkan calun parti sendiri.

Perarakan Anti Karpal

Sepanjang perarakkan, kedengar berkumandang laungan 'Hidup Melayu' dan 'Daulat Tuanku'. Perarak kelihatan memakai lilitan tertulis perkataan Daulat Tuanku.

Jurublog Kamaluddin melaporkan polis pencegah rusuhan telah menahan pearakan itu lebih kurang 500 ela dari rumah Karpal Singh di Taman Botani, Pulau Pinang dan memaksa perarakan itu disurai.

Menurut OCPD George Town ACP Azam Abdul Hamid, perhimpunan ini tidak mendapat kelulusan polis. Polis terpaksa bertindak untuk mengelakkan dari kekecohan keamanan.

Zaidi yang berucap kepada para demonstrasi menyatakan, "Walaupun polis telah menahan mereka, ini tidak bermakna semangat Melayu kami telah mati." Dia juga menegur polis yang menahan perhimpunan ini dari diteruskan.

Polis telah cuba menahan Mohd Zaidi tetapi beberapa mereka yang berlilit kepala merah telah dapat menyelamatkannya dan lari dalam sebuah kereta.

Dari laporan-laporan yang diterima, Dr Khir dan ketua Pemuda Umno Permatang Pauh, Mohd Zaidi Mohd Said telah dibawa ke balai polis Jalan Patani. Malaysiakini melaporkan Dr Khir dan Zaidi telah dilepaskan pihak polis setelah memberi keterangan.

Drama Si Penakut ala Anwar

Ini baru betul demonstrasi dan berani.

Bukan macam Khairy yang banyak berdrama macam Anwar Ibrahim tapi sebenarnya 'budak' penakut.

Dia tidak langsung terlibat dalam kes Perak tapi mahu mencari glamour seolah-olah dia terlibat. Bila dah orang lain bersusah payah berusaha, dia mencuri kemenangan dari mereka yang berusaha dengan memacak badut-badutnya. Konon berdemosntrasi ber Daulat Tuanku. Tak tahu malu!

Khairy hanyalah pemimpin yang berani, bila diiringai ramai-ramai oleh pengikut-pengikut bahalolnya yang perasuah tegar dan penjahanam perjuangan parti. Kehancuran negara ini adalah keghairahannya dan rakan-rakan Tingkat 4 menunjuk kebodohan dan ketidak pengalaman membawa agenda template textbook.

Kalau berlakun seperti yang berlaku dalam perhimpunan memprotes lawatan Condoleeza Rice, hebatlah. Betul-betul satu lakunan badut pak lawak yang orang kampung pun boleh baca? Ayahanda yang "boneka anakanda-anakanda" melayan Condoleeza tetapi anakanda konon-konon berdemonstrasi.

Itu pun tersentak kecut semasuk kedalam Pusat Konvensyen, apabila dengan nada marah ada seseorang memaksa serahkan kertas dan berambus.

Jangan ingat ada orang tak tahu.

* Update 8:00 pm

Dr Mahathir's advise to Muslim nations in coping with the global financial crisis

Unknown to the public, Dr Mahathir made a visit to Djibouti, the capital of Somalia for several speaking engagements at the end of January. He delivered a significant speech for the Muslim nations in facing up to the global financial crisis on January 30th.

He started his speech by telling the audience that the wealth created in western countries are superficial. They have left the business of producing goods and services for quick rich gambling in financial market and derivatives.

The problems begin when the bubble burst on the financial markets. This caused banks that lend for financial market speculation activities to collapse. This in turn shut the tap of credit to businesses resulting in a significant shrinkage to the real economy. Consequently, the poorer countries that rely on production and exports to richer countries are affected.

Having explained the problems with the banks and financial markets, he said idea of free and self regulating market does not work. It was the unregulated market that created derivatives, short selling, hedge funds, high leverage product and currency trading. Government must play a supervisory role and if necessary, intervention.

Dr Mahathir cautioned them that the western countries are living in denial. They failed to acknowledge that the failure of their banking system is the cause of the problem. Thus, poorer countries should understand this problem and deal with it.

He told the oil-rich Somalia not to invest in the west and avoid banks. He suggested investment in the newly indutrialised country's market and companies. These investments will be most valued when economy recover, which is not expected to be soon.

On their domestic economic management, Dr Mahathir suggested a lean and efficient Government. He proposed a tight Government control on banks and price of essential foods and goods. Domestic economic activities and infrastructure spending should be encpourage to overcome unemployment and stimulate the economy. Domestic tourism and limiting imports be encouraged to prevent outflow of funds.

His speech in full below:

SPEECH BY TUN DR MAHATHIR BIN MOHAMAD

GLOBAL FINANCIAL CRISES: HOW SHOULD A DEVELOPING ISLAMIC COUNTRY COPE WITH THE CHALLENGES

DJIBOUTI ON 30 JANUARY 2009

---------------------------

Bismillahirahmanirohim

Assalamualaikum warahmatullahhi wabarakatuh

Distinguished Guests,

Ladies and Gentlemen;

1. When I flew out of the UK for Riyadh on 25th January, the press reported that the UK is officially in recession. Other developed ethnic European countries may not have acknowledged that they are in recession but the undeniable fact is that all are in deep financial trouble. The richer they are, the worse is their economy. We need to know why and how the crises developed if we want to cope with it. Why has this crises involved the rich countries so badly? Why has it happened so suddenly? Only a few years back they were sloshing about in almost unlimited money. Their per capita incomes were very high, and millionaires were dime a dozen. Even billionaires were plentiful.

2. Actually the wealth created was not real. They were just illusions, with no real money being made. The business of producing goods and services were neglected because the profit margins were small by comparison to the profits from using money to make money, from the so-called capital gains, from short selling, investing in hedge funds and derivatives, and trading in currencies.

3. No goods or services would result from these gambling schemes. Practically no jobs were created. Yet huge amounts of money could be raised and the yield from these borrowed funds, sometimes as much as 30 times the initial amount invested, would give very high returns. Even after the fund managers have fiddled with the accounts and taken their cuts, bonuses and stock options; even after the interest on the loans were paid, the earnings of the investors would be far more than the dividends from real business.

4. For the banks themselves, the bigger the amount of loans they give out, the bigger would be the returns in terms of interest. Their tendency is to lend as much as possible and to secure risky loans through insurance or second mortgages. Hence the willingness to lend as much as 20 times the amount held by the funds, and to lend high risk dubious housing loans, the principal cause of the sub-prime crisis.

5. Other forms of gambling has been invented and introduced to investors and to the banks. The huge amounts of money for investments available to the funds enabled them to manipulate the share market, increasing and decreasing the values of the shares at will. It was the same with currency trading. So big are the funds and so sure are they of making extraordinary profits that they became more and more arrogant. The currency traders, for example, would attack even the rich countries, devaluing their currencies and making them actually poorer.

6. Those who invested in these funds were happy with the high dividends that they felt no necessity to enquire as to how the profits were made. And so the funds grew and grew until they had at their disposal more money than most Governments and countries. It seems as if nothing can stop them. They would become financially more and more powerful that Governments, even of the rich countries fear them. The most powerful countries in the world must listen to them, must legislate in favour of them, and must formulate policies that will enable them to continue their operations unchecked. They persuaded Governments not to interfere as the markets must be completely free.

7. But then the banks collapsed. Since all these funds depend on bank borrowings, very big bank borrowings, when the collapsed bank recalled the loans, borrowers were unable to raise the huge amounts demanded by way of margin calls. Since their assets were mainly in the form of shares of the companies they had invested, selling off the shares to raise funds resulted in steep falls of share prices. Very quickly the shares they held depreciated in value and the stock market collapsed.

8. With the collapse of the banks, all the financial institutions including the insurance companies and the mortgage companies collapsed, dragging all businesses, big and small down. In other words the whole economy of the rich went into a tailspin or would do so very soon.

9. As I have pointed out, it is the rich countries which seem to be most affected in the present crisis. Why is this so? It is simply because they apparently have the money to gamble. Their monetary system enables them to create money out of nothing and they then use this money to gamble in the financial markets. They made a lot of money at first and appeared to be very rich. But actually their wealth is represented only in figures in bank books which they cannot gain access to after the banks went bankrupt.

10. In America and in Britain millions have been thrown out of work. They will seek to be on the dole for the unemployed provided by the Government. The weakness of the dole system is that it is when the economy is bad and Government revenue is low that the amounts to be expanded on the dole is big.

11. The poor countries appear to be less affected by the crisis. This is because they do not have the money to speculate or rather to gamble on. But the poor countries all depend on the markets of the rich countries to sell their products. With the rich countries in recession they will not be able to buy the products of the poor. These products will not fetch the high prices as before.

12. Malaysia, for example, exports more than 100 billion US dollars worth of manufactured goods and raw materials. The exports have shrunken as the rich countries of Europe and America, which normally takes 40% of our exports, reduce their imports. Already their bankrupt banks are not able to issue Letters of Credits for the importers.

13. Even the oil producing countries are now earning less income as oil prices go down.

14. Loans from the big foreign banks will not be available to the poor countries.

15. National reserves held in foreign currencies will fall in value just when the economy of the poor countries is declining and the reserves are needed for sustaining the economy. It is also likely that the currencies of the poor countries will depreciate, making them even poorer.

16. There would be less foreign investments and the tourism industry would suffer quite badly.

17. In the face of all of these, what can the developing Islamic countries do to lessen the impact of the global financial crises?

18. Like all countries facing any crisis whether economic or financial, political or social, the first thing to do would be to seek to understand what is going on and what is the cause of the crisis.

19. For this, all the data that can be gathered must be studied. In this case the crisis is not domestically generated. It is generated in the rich developed countries. Fortunately, the rich countries of the West being confident their systems as well as how they operate them are first class, do not completely hide the goings on in their economy. They publish a lot of data which can give some clue as to what had happened.

20. But having said that, I would hasten to point out that they are more sophisticated in hiding things in their cover-ups. They have come up with all kinds of confusing economic terms that cannot be understood by the average poor country’s experts. This is especially so when the poor countries do not indulge in the kind of dubious activities they have invented for their own benefit.

21. The economies of the West (ethnic European countries) are much controlled by the rich, who would push for schemes for making more money more quickly. Towards this end they came up with the idea of less Government, of the markets being regulated by the markets themselves.

22. The markets are all about making profits, making money. When investors in the markets make big profits, they are not going to question why they are making such good profits. They would rather support the quick profit schemes and continue to invest.

23. And so the idea of the market regulating itself has not worked. As an example, the pyramid investment scheme operated by Bernard Madoff paid high dividends regularly. That Madoff was possibly taking the money invested with him to pay the dividends was never raised. And so Madoff lost 50 billion US dollars of the investors money before he was discovered.

24. So the first cause of the present day crisis was the belief that markets should regulate itself, that Government should not interfere.

25. Without Government supervision the market players invented more schemes for making quick money. This included financial schemes such as derivatives, short selling, currency trading, high debt to capital ratios of up to 30:1, hedge funds etc etc. Helping with the inventions of more gambling in the financial markets are the brilliant mathematicians of the great universities who regularly win Nobel Prizes for their quick profits formulas.

26. I must admit that I cannot understand many of these get-rich-quick schemes. But they were actually approved and promoted by the people who were supposed to regulate the financial market. The Federal Reserve Bank of the US under Alan Greenspan actually facilitated these schemes.

27. Very quickly the American people in particular were living on borrowed money completely. They felt no necessity to save for the future as they believe they can always borrow even when they have no means of paying back the loans they have taken.

28. When the amounts of unpaid loans or non-performing loans reached astronomical levels, the lenders i.e. the banks must collapse. There would then be a credit crunch and without bank financing, business especially big businesses simply cannot carry on.

29. There are more things that contributed to the credit crunch and financial crisis. But the rich nations which caused this crisis are in denial. They refuse to acknowledge that their banking and financial system have failed. Because they refuse to admit the real cause their remedies have also failed. That is why their bail-outs have not worked.

30. They are not going to turn around the economy any time soon. So we and the rest of the world can safely conclude that the crisis will not end quickly. We will have to live with this crisis for a long time and if we want to cope with it we must be prepared for the long haul.

31. Firstly I would suggest developing countries deal with the direct effect of foreign factors on the country’s economy. As has been pointed out it is the need to have economic relations with these foreign economies which result in the crisis in these countries affecting the economies of the developing countries.

32. Almost invariably we use the US dollar in trade. When the US dollar depreciates we lose the value of our reserves and also our earnings from exports. When the US dollar appreciates we will have to pay more for our imports.

33. To reduce the effects of the fluctuations of the US dollar we should diversify our reserves. We should of course study the exchange rates of the principle trading currencies such as the Euro and the Yen in order to determine the currency we should use for trade at a given time. When we can we should link our currency to gold and use gold as a standard for determining export and import prices.

34. The chances are the US dollar would devalue faster against other currencies and against gold. That being so we should try not to use the US dollar in trade. If we earn US dollars from exports, it would be a good thing to immediately convert to another currency that is likely to appreciate against the US dollar.

35. It is now not the best time to invest in the rich countries especially in the funds operated by western countries.

36. Where possible new markets must be found. China will continue to be a good market for raw materials. To a lesser extent so will India and the newly industrialising countries of East Asia.

37. Cash rich countries should invest in shares of established companies and properties in the newly industrialising countries. However, purchasing property in the rich countries of Europe can also bring good returns in the long run. Sooner or later the countries would recover and so would the industries. Prices for shares and properties are very low now. Investments in banks and financial institutions should be avoided as many would not recover at all.

38. Domestically there is a need to be lean and efficient. Government control over banks needs to be tightened. In fact some kind of price control of essential foods and goods should be imposed.

39. Domestic economic activities which can contribute towards growth should be encouraged. Government spending on infrastructure would help overcome unemployment and stimulate the economy. Domestic tourism should be encouraged to prevent outflow of funds due to foreign travels.

40. Imports should be limited except for materials which goes into the production of goods for exports. Food production should be encouraged and where possible import substitute industries must be initiated or expanded. Taxes on imports should be increased especially on luxury items.

41. The Government must know at all times the performance of the economy in order to identify which sectors need to be given special incentives and which to regulate or restructure.

42. The finances of the Government must be strictly managed. By controlling prices the cost of living may be made to avoid high inflation.

43. These are some of the ways that developing Islamic countries can mitigate the effect of the crisis. There can be many more if we study each country’s case separately. Regional counter measures may also help.

44. But as mentioned above, this crisis will take a long time to be reversed. The world must work together to devise a new monetary and financial system so as to get rid of the weaknesses which had enabled gamblers to abuse the system. The developing countries must work together to make sure that they have a say in the formulation of the new monetary and financial systems. Otherwise, the rich will again come up with systems that will benefit them only.

45. I hope I have been able to answer some of the questions posed by the title of this talk.

Short Reprise from Politics: How To Solve The Economic Crisis?

I would prefer to write on the political intrigues of Perak, but blog browsers and the generally apolitical people must be tired with the excessive politics.

That we should blame on Anwar Ibrahim, whose incessant politicking would not stop at anything till he become PM. DAP, which used be fairly consistent in it's principles, is a willing party in Anwar's wayang. Whilst, the PAS Mullah have pitifully resorted to a pathetic "they can't but we can" justification.

Lets talk of economics, the concern of the majority of the rakyat. For the past one week, I've carrying around a book by Ellen Brown, The Web of Debt to read whenever there is a possible space of time. It is an interesting read, not becasue it is another startling revelation of the fiat based-financial system but for it's more precise revelation.

Ellen was in Kuala Lumpur and she appeared in an interview on Astro Awani last night (perhaps pre-recorded). On February 4th, 2009 recently, she participated in a close door discussion, Strategy Session For The Select Group On The Global Financial Crisis organised by National Chamber of Commerce and Indistry Malaysia (NICCI) and Al Bukhary Foundation and chaired by Tun Dr Mahathir. Present were captains of industries, Government officials, economist and many notable personalities.

This blogger received an invitation and attended the closed door session. As much as I would like to write about it, the detail of the discussions requires further deliberation and have to be respectably kept under lid as it is premature to reveal to the public. However, writer and blogger Syed Akbar did touched on it briefly here.

Ellen Brown's presentation in the afternoon session caught this blogger's attention. Otherwise, I would have left from the boringly predictable, conservative, and in-the-box perspectives by many of the discussants. In October and November last year, this blogger wrote postings - A Short Word on Writers, Back to Politics, and Bit on Economy and If I am Najib - to offer a personal thought on the need to emphasise on the real-economy over the monetary side and a major reconstruction of the financial sector. My aspiration for the restructured monetary system, I quote:

"It must be one that is ethically based, complimenting real economy of goods and services, shared risk between owners of capital and entrepreneurs (not risk free), and not an economy based on growth by any account to compensate for interest cost and payments."

Ellen's presentation enlightened me and I felt it could provide that bridge to lead from my philosophical expectation towwards deriving possible options for solution. The political will and leadership (a common voice heard in the session) is sorely required.

Readers will not be in vain from this self imposed blackout. Ellen had written an article on Global Research (below) on the subject and it provide a glimpse of her work and finding.

--------------------------

How to Resolve the Credit Crisis: Credit Where Credit is Due

by Ellen Brown
Global Research, January 11, 2009

Letter to the bank – Dear Sirs, In light of recent developments, when you returned my check marked “insufficient funds,” were you referring to my funds or yours?

Economist John Kenneth Galbraith famously said, “The process by which banks create money is so simple that the mind is repelled.” If banks can create money, why are we suffering from a “credit crunch”? Why can’t banks create all the money they can find borrowers for?

Last fall, Congress committed an unprecedented $700 billion in taxpayer money to reversing the credit crisis, and the Federal Reserve has already fanned that into $8.5 trillion in loans and commitments.1 But the bank bailout has proven to be no more than a boondoggle for a handful of lucky Wall Street banks, without getting credit flowing again.

To understand the real cause of the credit crisis and how it can be reversed, we first need to understand credit itself – what it is, where it comes from, and what the real tourniquet is that has limited its flow.

Banks actually create credit; and if private banks can do it, so could public banks or public treasuries. The crisis is not one of “liquidity” but of “solvency.” It has been caused, not by the banks’ inability to get credit (something they can create with accounting entries), but by their inability to meet the capital requirement imposed by the Bank for International Settlements, the private foreign head of the international banking system.

That inability, in turn, has been caused by the derivatives virus; and only a few big banks are seriously infected with it. By bailing out these big banks, the government is actually spreading the virus by furnishing the funds for them to take over smaller regional banks.

A more effective alternative than trying to patch up the hopelessly imperiled derivatives positions of these few Wall Street banks would be to simply create another credit system with a pristine set of books.

We don’t need to fix the Wall Street disease; we can bypass the whole problem and create a new, healthy, parallel system. A network of public banks (federal and state) could create “credit” just as private banks do now. This credit could be extended at low interest rates to consumers and at very low interest to local governments, drastically reducing the cost of public projects by reducing the cost of funding them.

That is not a radical proposal. It is what private banks themselves do every day. But bankers will dispute it, and most people have trouble believing it. So to make a compelling case for this solution, the first thing that needs to be established is that . . .

Banks Create the Money They Lend

Bankers will tell you that they do not create money. At a 10% reserve requirement, they simply lend out 90% of their deposits. The catch is that their “deposits” include the money they have written into their customers’ accounts as loans. That is how loans are made: numbers are simply written into the accounts of borrowers, as many reputable authorities have attested.

Here are two of them, dating back to when officials were either more aware of what was going on or more open about it:

“[W]hen a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposit; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.”

– Robert B. Anderson, Treasury Secretary under Eisenhower, in an interview reported in the August 31, 1959 issue of U.S. News and World Report

“Do private banks issue money today? Yes. Although banks no longer have the right to issue bank notes, they can create money in the form of bank deposits when they lend money to businesses, or buy securities ... The important thing to remember is that when banks lend money they don’t necessarily take it from anyone else to lend. Thus they ‘create’ it.”

– Congressman Wright Patman, Money Facts (House Committee on Banking and Currency, 1964)

The process by which banks create money was detailed in a revealing booklet put out by the Chicago Federal Reserve titled Modern Money Mechanics.2 The booklet was periodically revised until 1992, when it had reached 50 pages long. It is written in somewhat difficult prose, but here are a few relevant passages:

“The actual process of money creation takes place primarily in banks.” [p3]

Translation: banks create money.

“In the absence of legal reserve requirements, banks can build up deposits by increasing loans and investments so long as they keep enough currency on hand to redeem whatever amounts the holders of deposits want to convert into currency.” [p3]

Translation: banks can create as much money as they want by writing loans into their borrowers’ accounts, limited only by (a) legal reserve requirements (money that must be held in reserve – traditionally about 10% of outstanding deposits and loans) or (b) the amount of money they will need to keep on hand to pay any depositors who might come for their money (also traditionally about 10%).

“Banks may increase the balances in their reserve accounts by depositing checks and proceeds from electronic funds transfers as well as currency.” [p4]

Translation: the “reserves” that count toward the reserve requirement include currency, deposited checks, and electronic funds transfers. (Note that the “deposits” created as loans are excluded from this list of allowable reserves: the bank cannot just keep bootstrapping loans on top of loans but must have money from external sources backing up its liabilities equal to about 10% of its loans and deposits.)

“The money-creation process takes place principally through transaction accounts [accounts that can be drawn on without restriction].” [p2]

“ With a uniform 10 percent reserve requirement, a $1 increase in reserves would support $10 of additional transaction accounts.” [p49]

Translation: $1 deposited by a customer can be fanned into $10 in loans.

“In the real world, a bank’s lending is not normally constrained by the amount of excess reserves it has at any given moment. Rather, loans are made, or not made, depending on the bank’s credit policies and its expectations about its ability to obtain the funds necessary to pay its customers’ checks and maintain required reserves in a timely fashion.”

Translation: In practice, banks issue loans without worrying too much about whether they have the reserves to cover them. If they come up short, they can just borrow them:

“[Since] the individual bank does not know today precisely what its reserve position will be at the time the proceeds of today’s loans are paid out. . . . many banks turn to the money market - borrowing funds to cover deficits or lending temporary surpluses.” [p50]

“[A] bank may [also] borrow reserves temporarily from its Reserve Bank . . .

[However], banks are discouraged from borrowing [Reserve Bank] adjustment credit too frequently or for extended time periods.” [p29]

Translation: If the bank finds at the end of the accounting period that its reserves do not come to the required 10% of its outstanding loans and deposits, it can simply borrow the reserves it needs from the money market or its Federal Reserve Bank.

A 2002 article posted on the website of the Federal Reserve Bank of New York noted that today, few banks are constrained by reserve requirements at all:

“Since the beginning of the last decade, required reserve balances have fallen dramatically. The decline stems in part from regulatory action: the Federal Reserve eliminated reserve requirements on large time deposits in 1990 and lowered the requirements on transaction accounts in 1992. But a far more important source of the decline in required reserves has been the growth of sweep accounts. In the most common form of sweeping, funds in bank customers’ retail checking accounts are shifted overnight into savings accounts exempt from reserve requirements and then returned to customers’ checking accounts the next business day. Largely as a result of this practice, today only 30 percent of banks are bound by a reserve balance requirement.”3

Even without official reserve requirements, however, banks must keep enough money on hand to meet withdrawals or checks written against the accounts of their depositors; and that generally means about 10% of outstanding deposits and loans, as moneylenders discovered centuries ago. But if the banks come up short, they can borrow this money from the money market or the Federal Reserve; and if the Fed comes up short, it can create new reserves.4 So why the current credit crunch? What is limiting bank lending?

One answer is that borrowers are simply “tapped out” and not in a position to take out as many loans as they used to. When housing and the stock market crashed, consumers no longer had home or stock equity to borrow against.5 But to the extent that the blockage is with the banks themselves, it is not caused by the reserve requirement. Something else is putting the squeeze on credit . . . .

The Real Tourniquet:
Capital Adequacy and the Mark-to-Market Rule

What actually constrains bank lending is the capital adequacy requirement, something that is imposed not by our own central bank but by the Bank for International Settlements (BIS). Called “the central bankers’ central bank,” the BIS pulls the strings of the private international banking system from Basel, Switzerland.

How the capital requirement is determined is even more complicated than the reserve requirement, but it needs to be understood to understand why banks with the power to create money are going bankrupt.

So here is a simplified version. A bank’s “capital” consists of its assets minus its liabilities. Under the capital adequacy rule imposed by the Basel Accords, assets are “risk-weighted,” with some being considered riskier than others. Ordinary loans have a “risk weighting” of 1. The capital adequacy rule requires that the ratio of a bank’s capital to its assets with a risk-weighting of 1 be at least 8%. That means the bank must have $8 in capital for every $100 in ordinary loans. Federal bonds have a risk-weighting of zero: they are considered to be as safe as dollars and don’t need any extra capital backing them. Mortgage loans (which are secured by real estate) have a risk weighting of .5. That means they need only $4 of capital per $100 of loans. Other bank exposures given risk weightings include such things as derivatives and foreign exchange contracts.6 (Interestingly, the $700 billion committed by Congress to bailing out the financial system is approximately 8% of the $8.5 trillion the Fed has now promised in loans and commitments. Even the Federal Reserve evidently feels constrained by the BIS capital requirement.)

A very controversial accounting rule imposed on banks for their capital ratio calculations is the “mark to market” rule. This rule requires banks to revalue all of their assets each day as if the assets had to be sold that day. Capital calculations thus fluctuate with the market; and in today’s volatile market, all asset classes have plunged at the same time. Since assets get marked to market but liabilities don’t, a bank may suddenly find that its assets are insufficient to support its liabilities, rendering it insolvent and unable to make new loans.

Banks have gotten around the capital adequacy requirement by reducing risk on their balance sheets with a form of private bet known as “derivatives.” At least, they thought they had gotten around the rule. But this unregulated form of insurance proved to be based on faulty mathematical models. (See Ellen Brown, “”Credit Default Swaps: Derivative Disaster Du Jour,” and “It’s the Derivatives, Stupid!,” www.webofdebt.com/articles.)

“Credit default swaps” (CDS) are a form of derivative widely sold as insurance against default. When AIG, the world’s largest insurance company, ventured into CDS in the late 1990s, the presumption was that “housing always goes up” and that the risk of default was so remote that selling “credit protection” was virtually “free money”.7 But this free money turned into a serious liability to the protection sellers when the “remote” actually happened and a flood of defaults struck.

The value of the derivatives protecting securitized mortgages became so questionable that they were unmarketable at any price. Banks counting them as assets on their books then had to “mark them to market” effectively at zero, reducing the banks’ capital below the levels called for in the Basel Accords and rendering the banks officially insolvent.

When AIG went broke in September 2008, banks heavily involved in derivatives faced double jeopardy: not only would they have to write down the derivative protection they had sold to others and counted as assets on their books, but they could no longer count on the derivative insurance they had bought to minimize the risk of default on their other assets. AIG got a massive bailout from the Fed in return for most of its equity, but even that bailout money is not expected to be enough to get it out of its derivative nightmare and keep it afloat.

Derivatives have introduced a lack of transparency into bank portfolios, creating fear and uncertainty on the part of lenders, depositors and investors alike. This uncertainty has prevented banks from raising capital by selling stock, or meeting reserve requirements by getting interbank loans; and it has discouraged investors from investing in the money market. Banks don’t know whether the money they lend to each other will be repaid, since they don’t have a clear view of the value of the assets carried on bank balance sheets. The result is a crisis of confidence: the players are all eying each other suspiciously and holding their cards close to the chest.

Going Local

Fortunately, according to a recent study using the Treasury Department’s own data, the banking crisis is not widespread but is limited to only “a few big, vocal banks.”8 The real credit problem lies with the financial institutions with significant derivative exposure, and most of this liability is carried by only a handful of Wall Street giants.

In early 2008, outstanding derivatives on the books of U.S. banks exceeded $180 trillion. However, $90 trillion of this was carried on the books of JPMorgan Chase alone, while Citibank and Bank of America each had $38 trillion on their books.9 Needless to say, these are also the banks that are first in line for the Treasury’s bailout money under the Troubled Asset Relief Program. Rather than excising the relatively contained derivative tumor, the Treasury and the Fed are feeding it with trillions in taxpayer money; and this money is being used, not to unfreeze credit by making loans, but to buy up smaller banks.10 That means the derivative cancer, rather than being excised, is liable to spread.

We the people and our representatives in Congress have allowed Wall Street to call the shots because we think we are dependent on their credit system, but we aren’t. There are other ways to get credit -- ways that are fair, efficient, transparent, and don’t encourage greed. Public credit could be generated by a system of public banks. Precedent for this solution is to be found in the state-owned Bank of North Dakota, which has been generating credit for North Dakota since 1919, keeping the state fiscally sound when other states are floundering. (See Ellen Brown, “Sustainable Government: Banking for a ‘New’ New Deal,” webofdebt.com/articles, December 8, 2008.)

The credit crunch could be avoided by “going local” not just in the United States but around the world. Countries that have been seduced or coerced into funneling their productive assets into serving foreign markets and foreign investors could become self-sustaining, using their own credit and their own resources to feed and serve their own people. There is much more to be said on this subject, but it will be saved for future articles. Stay tuned.

Notes

1 Kathleen Pender, “Government Bailout Hits $8.5 Trillion,” San Francisco Chronicle (November 26, 2008).
2 Modern Money Mechanics: A Workbook on Bank Reserves and Deposit Expansion (Federal Reserve Bank of Chicago, Public Information Service, 1992, available at http://www.rayservers.com/images/ModernMoneyMechanics.pdf.
3 Paul Bennett, Savros Peristiani, “Are Reserve Requirements Still Binding?”, Economic Policy Review (May 2002).
4 Modern Money Mechanics, op. cit.
5 Joshua Holland, “Was the ‘Credit Crunch’ a Myth Used to Sell a Trillion-Dollar Scam?”, AlterNet (December 29, 2008).
6 “Capital Requirement,” Wikipedia.
7 Robert O’Harrow Jr., Brady Dennis, “Complex Deals Led to AIG’s Undoing,” Los Angeles Times (January 1, 2009).
8 J. Holland, op. cit.
9 Comptroller of the Currency, “OCC’s Quarterly Report on Bank Trading and Derivatives Activities Third Quarter 2008,” www.occ.treas.gov; “US Bank Derivative Exposure,” FDIC/IRA Bank Monitor, chart reproduced on The Big Picture (blog), August 2008.
10 Joe Nocera, “So When Will Banks Give Loans?”, New York Times (October 25, 2008).

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Ellen Brown developed her research skills as an attorney practicing civil litigation in Los Angeles. In Web of Debt, her latest book, she turns those skills to an analysis of the Federal Reserve and “the money trust.” She shows how this private cartel has usurped the power to create money from the people themselves, and how we the people can get it back. Her earlier books focused on the pharmaceutical cartel that gets its power from “the money trust.” Her eleven books include Forbidden Medicine, Nature’s Pharmacy (co-authored with Dr. Lynne Walker), and The Key to Ultimate Health (co-authored with Dr. Richard Hansen). Her websites are http://www.webofdebt.com/ and http://www.ellenbrown.com/.

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We could ask ourself: Could we have a banking system that is not a self-interest enterprise of private ownership, but dedicated to serve the social and real-economic development needs of the people, society, and nation, while on the same note carry out the functionaries with prudence, honesty, and effectiveness?

Fodder for thought ...

Khairy's pursuit for popularity, but remain UMNO's liability

Blog AK47 Sakmongkol equates KJ's presence on Monday's Ipoh rally against Karpal Singh to General Patton addressing his troop in Sicily before the invasion of Germany during World War II. To simplify his and Setiakawan bloggers campaign, by that presence and showmanship he deserve to be the next Ketua Pemuda UMNO. ... lol.

Allow me to offer my friendly "sembah berbeza" to Dato Arif without having to express explicitly my preference, be it Mukhriz or Dr Khir Toyo. KJ is no General Patton, not even equivalent to any single piece of the brash General's finger nail. He is merely a candidate trying hard to gain attention to his already sagging campaign.

His presence adds to the already overkill demonstrations against a crippled and already isolated Karpal Singh. It's like blasting a fly with a cannon. The real enemy is neither Karpal Singh nor deposed MB, Muhamamd Nizar.

Given my choice, I would rather find a back passage to reach and console Nizar. We'll just leave Karpal alone. He'll get tired. The louder he gets, it will just messed up DAP. The real enemny that is getting away is the deceptively devious Anwar Ibrahim and the commie cousins Nger and Nga.

In a delicate situation like this, KJ's presence for his selfish political interest would only inflame voters against UMNO instead infuriating them against the Derhaka act of Pakatan Rakyat. Having UMNO-liability's presence would damper efforts, just like in the past General and By-Election.

KJ should have prove his mettle as a leader by being unselfish and to stay away. He will on steer away voters, where lies the real struggle and immediate priority of UMNO, be it for the Bukit Gantang and Bukit Selambau by-elections and GE13.

Demo in Ipoh

The Malaysia Insider Report on the demonstration in Ipoh as follows:

Protestors were tearing up posters of Nizar, chanting ‘Hidup Melayu’ and ‘Daulat Tuanku’.

By Shannon Teoh

IPOH, Feb 9 — Deputy Umno Youth chief Khairy Jamaluddin called for Datuk Seri Nizar Jamaluddin to be stripped of his citizenship as he led protests by the Barisan Nasional (BN) faithful here today as part a campaign to label the Pas man a traitor.

About 1,000 mainly Umno Youth members attended the rally here under the watchful eyes of the police, as BN now hopes to shore up support for Datuk Zambry Abdul Kadir, who was sworn-in by Sultan Azlan Shah last week to replace Nizar as Perak mentri besar.

Nizar has refused to resign and maintains he is still the legitimate MB.

Speeches by several BN Youth leaders suggested attempts to reverse the perception that BN’s power grab was unconstitutional and pro-Malay. Instead, the speeches portrayed Pakatan Rakyat as anti-Sultan.

The speeches were punctuated by cries of “Hidup Melayu” and “Daulat Tuanku.”

“In the old days, what did we do to those who committed treason?” Khairy asked the crowd at the Jalan Sultan Abdul Jalil field here.

The crowd replied “kill him!” as they waved banners with the words “Nizar Penderhaka Melayu Moden (Nizar is the modern day Malay traitor)” but Khairy instead said that “we only ask that they be stripped of their citizenship,” referring to Nizar and other PR leaders who have supported his decision.

The crowd started tearing up posters with pictures of Nizar, as Khairy also called for Nizar and Perak DAP chief Datuk Ngeh Koo Ham’s titles to be retracted.

Those assembled, joined by several Malay NGOs, and representatives from MCA, MIC and PPP Youth members from Perak, then took a pledge requesting Sultan Azlan Shah to do as Khairy had asked.

Khairy also told the crowd that their position should not be seen as racial as “our friends from MCA, MIC and PPP” are here.

“The anger is not just from Malays but the rakyat as the opposition has broken the principles of the Rukunegara,” the Rembau MP said.

He also called on Umno Youth members to guard the gates to the state secretariat tomorrow as Nizar and his executive councillors are expected to continue to try to report for work.

“If you see the illegal government coming, I order you as deputy Youth chief to do what is necessary,” he said.

Later, when pressed on what is “necessary” by reporters, Khairy said that as the Ipoh police chief had assured him that they would not allow the PR men to enter the premises, Umno Youth would stand down.

“I hold him to his promise. But if they are not able to deliver, then I cannot guarantee their actions due to their anger,” he said.

“This is not a constitutional crisis. This is a crisis of power,” Khairy added, stating that the fact that PR could not relinquish the state government after being ousted through due process showed that they were power-crazy.

Bodoh Betul This KJ

In Tun Dr Mahathir's words, it is legally right to bring the Sultan to court but it is not ethically right. The Rukunegara requires every Malaysian to be loyal to the King, as the symbol sovereignty and Country.

If Pemuda UMNO are really behind the King, why was there no demonstration in front of Standard Chartered Bank when the late Yam Tuan Negeri Sembilan was taken to Special Court? On the hand, where were the PAS and PKR supporters that demonstrated in support of Ahmad Said against Idris Jusoh's "Natang" supporters in Terengganu?

KJ had no sense of strategy on this issue. He was a hard-up glory seeker trying to get some attention by stealing the limelight away from Dato Najib. He is perhasp not aware that many working in the background bridging with the opposition ADUNs are in a foul mood. One chap unhappy with the manner the victory was stolen away from them uttered this, "Kalau dema ni cakap banyak, teman pusingkan balik ke Nizar."

KJ is desperate. His campaign is not doing fine. His positive campaigning is not working. Neither is his negative campaiging against other candidates. KJ's rhetorics are not working. They nod and praise him but they say something else behind his back. His money is not taking him any further. There are delegates willing to give Mukhriz despite knowing well ahead they will be shaking a "tangan kosong".

His reputation is as good as "tanam" that no lyrical words from Dato Arif can salvage. What more without the presence of the more eloquent Mr Padedoh to give some flair to the shallow cyber campaigning of the Setiakawan bloggers, the like of SUKJ and Bro_Jinggo.

No amount of denial from KJ or counter spin by his Setiakawan bloggers can erase the already inscribed impression that KJ is behind asset sales to Singapore Temasik, intrusion into his father-in-law's work and his directive phone calls in UMNO, to civil servants and Ministers.

All those curses in his campaign strategy meetings have hurt him without him realising his troops are deserting him. They are sticking around for his money and to funnel info to the other side.

Not only he is not going to win the Ketua Pemuda post, his brash manner, and arrogant posterior will continue to be a liability for UMNO. How many more arrogant campaign speeches and stupid stunts from KJ should we tolerate? Lets not forget that the root cause of UMNO's predicament is Abdullah Badawi, Kamaluddin Abdullah, Khairy Jamaluddin dan Kalimullah.

I may need to awake Dato Arif from his afternoon lull. Having a brash, uncultured, and reputably rude and arrogant young punk as leader of Pemuda UMNO spells D-I-S-A-S-T-E-R for UMNO in the next GE13. More so, with someone already soiled with allegations of corruption and power abuse.

It's pointless. Just dump him!

The Way To Win

Instead of KJ's overkill, there is no use to have UMNO do demonstration. It provides basis for PAS to accuse UMNO is behind the power grab. They should have stayed away so that the public do not have the impression of UMNO's over enthusiasm to hold power. Such demonstrations should be left to the NGOs, which is a better reflection of the people expression. The more PAS do their outburst, it only adds the impression that it is PAS versus the peoples' wishes.

With Malay voters in a daze, voices of unity is more soothing to their ears. The best way is to talk of Malay unity. The last we would want is an overkill that turn these voters into sympathisers for Nizar and Karpal. This words of Mukhriz should have a more positive outcome to the more reasonable voters for UMNO to win votes at Bukit Gantang:

Better for Perak Pas to join BN, says Mukhriz

KUALA LUMPUR, Feb 9 — It is better for Perak Pas to join the Barisan Nasional (BN) to strengthen Malay unity and hence enable a stronger government to be formed in the state, said Umno Youth executive committee member Datuk Mukhriz Mahathir.

Mukhriz, who is also the Member of Parliament for Jerlun, said Pas should consider this alternative as the combined seats of the BN, PAS and Independents in the Perak legislature would enable a strong government to be formed in the state.

“If the Malays are united, all Malaysians stand to benefit,” he told reporters at the pre-launch of the Down Syndrom Association of Malaysia’s gala dinner, here today.

Mukhriz said this in commenting on the political turmoil in Perak in the wake of the BN wresting power from Pakatan Rakyat in the state.

In the general election last March, Pas won six seats, PKR (7) and DAP 18 to form the Pakatan Rakyat government in Perak. The BN won 28 seats.

However, following defections from amongst its ranks, the coalition lost its majority in the 59-seat state assembly and thus enabling the BN to take over.

Mukhriz also urged DAP chairman Karpal Singh to desist in his plan to take legal action against Sultan Azlan Shah of Perak and accept the fact that the BN was now in power in Perak. — Bernama

I wish I know what Dr Khir Toyo's position and statement on the Perak debacle. Mind you, he will be very effective for Bukit Gantang. Unknown to many, he joined UMNO through the Bukit Gantang Division.

Anwar Chicken-out, Back to Play-acting

In my post Challenge to Anwar, The Play Actor this morning, I put up few challenges and possible Anwar reactions:

1. Takeover the Federal Government in the manner Najib had done since he had claimed he has the sufficient number of crossover.


2. Sue the Sultan instead of suing Barisan Nasional since he claimed his Pakatn rakyat will discuss that option.


3. Report Tengku Ellina and Sultan Perak to ACA for Corruption.


4. Leave Nizar hanging to dry.

For the first senario, we will have to wait for Parliament to begin it's fourth seating on February 15th, 2009 next Monday.

In his unsuccessful attempt for September 15th, 2008, Anwar made up excuse and play acted as though Abdullah is uncooperative and the Speaker refuse to allow a vote of no confidence. The truth to the matter, Anwar didn't have sufficient numbers to reveal and made up excuses to maintain secrecy.

For the second senario, Anwar announced today to postphone the lawsuit citing a seditous accusation that the judiciary will be bias. The Malaysia Insider reported PR leaders were concerned with the image of anti-Sultan labelled at Nizar.

Basically he chickened out and is making excuses. Another of his signature Tamil drama unfolding.

Suit against BN government postponed over concerns of bias

By Shannon Teoh, Malaysia Insider

IPOH, Feb 9 — Pakatan Rakyat (PR) concerns over the impartiality of judges in Ipoh has delayed the filing of its suit to declare the Barisan Nasional (BN) Perak government illegal.

Datuk Seri Nizar Jamaluddin was due to file the suit against his dismissal as mentri besar tomorrow but Perak DAP chief Datuk Ngeh Koo Ham today told a party EGM that it would only be filed on Wednesday or Thursday.

“Some members of the legal team have doubts over whether judges in Ipoh can be impartial as this involves the Sultan and they might be under pressure from other known personalities,” he said.

He added that while the suit should be filed in the Ipoh High Court as the events transpired here, there was a possibility of filing it in Kuala Lumpur instead.

“But will it just be transferred back to Ipoh? We want the fastest solution,” Ngeh, who is also the PR administration’s senior state exco member.

With the BN executive council lineup due to be sworn-in soon, Ngeh said that the suit may also name them as defendants.

This has not been the first time that the proposed suit has been a source of differing opinions.

There has also been debate over whether the Sultan should be named as a defendant as proposed by DAP chairman Karpal Singh.

The proposal was a non-starter as other PR leaders are wary of being labelled anti-Sultan but it also contributed to Karpal’s outburst yesterday where he called for Opposition Leader Datuk Seri Anwar Ibrahim to step down as head of PR.

To reiterate my earlier point, the only way for a legal redress is to put the Sultan as defendent. By putting the Barisan Nasional as defendent, the suit will be dismiss because it is the wrong party. The whole responsibility lies with Sultan.

If Anwar, Nger, Nga and Nizar is not as brave as the DAP Chairman, Karpal Singh to pursue the legal recourse, then they should forever hold their peace and accept the royal decree without further question. Be a gentlemen to leave behind the keys to the official residence and car.

On the third senario, Anwar's posting on Gamuda have been removed. His blog had put up a posting based on a commentary on the alleged royal family business interest in Gamuda.

As of yesterday, Raja Petra, who is now openly backing Anwar, had put up an article Was the Sultan of Perak Blackmailed? on Malaysia Today with links to blog article Perak, PR, BN and Gamuda - It’s all about Business, Stupid and website Construction New Road Project From Sapulut to Kalabakan, Sabah .

Will Anwar make a ACA report on this allegation? We'll see but seriously doubt this spineless liar without any ounce of principle have the guts to pursue.

As for the fourth senario of Anwar leaving Nizar hanging to dry, it has yet to materialise as he weighs the situation with a by-election due from the death of Roslan Shahrum of PAS MP for Bukit Gantung.

With Anwar asking Pakatan Rakyat to hold back suing the Sultan, that senario is developing. The obvious person he is hanging to dry will be Karpal Singh, who was brushed aside by Anwar as personal view and Nik Aziz, Hadi, Lim Kit Siang, and Lim Guan Eng reiterating support for Anwar. DAP is indenial of a major internal problem within the party.

How much longer will Anwar able to provide the glue between DAP and PAS in PR? The coalition has yet to be formalised and registered.

Furthermore, Anwar has to deal with his sodomy court case and is merely delaying the case management process. Many circles believed he has no defense or specifically alibi against the charge. One can expect the continuation of his earlier Tamil drama to run to the Turkish Embassy, dramatising his police detention, medical check-up, and refusal to do the Muhabalah swearing.

PKR Exco to resign, Perak PAS MP died

Latest SMS Alert:
9/2 13:03:49 PAS MP (Gantang, Perak) Roslan Shaharum died in a road accident this morning/Star
9/2 13:19:05 Correction: PAS MP for Bukit Gantang, Perak, Roslan Shaharum, 50 died of a heart attack while cycling this morning/STAR

His blog here. Al Fatihah.

PAS Kedah Government is aware one of it's state exco member may have got himself in a legal problem. PAS and PKR are pre-empting the problem to blame on BN. No effort and option will be spared, including news spin and by-election.

Harakahdaily report dated February 2nd, 2009 spinned a title claiming one Kedah PKR exco member is being bait and threatened to leave PKR. The report is a press release by exco and Bukit Silambau Assemblymen, YB Arumugam s/o Vengatarakoo.

Pahang Daily blog posting today claimed Arumugam will be resigning soon and a by-election for the Bukit Silambau seat is expected. The reason cited is is Arumugam couldn't handle the pressure from Barisan Nasional.

There is no specific mentioned but typical PKR wild acusation against PM-in-waiting Dato Seri Najib. The accusation is Barisan Nasional is getting even for the repeated losses at Permatang Pauh and Kuala Terengganu. Money and woman is not spared in their pursuit to bring down the Kedah Government.

Such accusation is substantiated and not viable. PAS has a strong hold on the Kedah Dewan Undangan Negeri with a fairly comfortable lead over UMNO and BN. It is difficult or if not, near impossible to grab power through power hopping in Kedah.

Out of the 36 Assemblymen seats, Pakatan Rakyat controls 22 over 14 for BN with UMNO 12, PAS 16, PKR 5 and one each for DAP and MCA. It would take more than 5 party hopper for BN to gain control. The possibility is unlikely with Pak Lah's man, YB Dato Mahadzir Khalid as Kedah UMNO Liaison Chief.

The present PAS Kedah Government have gained respect from the 80% Kedah Malay population with their housing policy to reserve a higher quota for Malay in new housing areas. In his January 17th,2009 press release, Dato Mukhriz raised the issue of sales of the 400 ha Kerpan prawn cultivation land to an oil refinery company. The political impact on the Kedah Government could not be ascertain.

Bigdogdotcom blog had a posting today of a State Councillor in Kedah getting a "second wife" without a legal divorce received from her first husband. Big Dog, who has came out of anonimity, refrained from revealing name. However, he dropped hint that the said exco is a non-Muslim by quoting Civil Marriage Act.

Other than Arumugam, the other non-Malay/Muslim is a Chinese PKR Assemblyman, YB Tan Wei Shu. Wonder whose got their wee wee in without proper marriage license? The Chinese or the Indian PKR Assemblymen?

My bet is on Arumugam. Any takers?

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Exco Kerajaan Negeri Kedah diugut, dipujuk keluar KeADILan

Arumugam a/l Vengatarakoo
Harakahdaily, Mon Feb 02, 09

Sidang media ini dipanggil untuk menerangkan beberapa perkembangan terbaru yang serius yang melibatkan isu-isu politik yang berunsurkan jenayah yang sedang berlaku di negeri Kedah, yang melibatkan saya selaku Ahli Dewan Undangan Negeri Kedah dan ahli Exco Kerajaan Negeri Kedah.

Satu repot polis telah dibuat hari ini merangkumi semua kes-kes ugutan jenayah terhadap saya selaku Ahli Dewan Undangan Negeri Kedah dan ahli Exco Kerajaan Negeri Kedah, dan juga terhadap keselamatan keluarga saya sejak dari 8hb Mac, 2008.

Ianya juga melibatkan semua ugutan terhadap pegawai-pegawai dan bekas-bekas pegawai saya. Ke semua ini adalah bertujuan bagi mengugut saya untuk bersetuju berpindah parti dari Parti Keadilan Rakyat ke Barisan Nasional.

Antara insiden-insiden yang melibatkan ugutan jenayah adalah cubaan menculik saya pada 17/10/2008, mengugut saya melalui pegawai saya melalui beberapa panggilan telefon yang antaranya pada 31/3/2008, mengugut keselamatan keluarga saya, insiden memecahkan cermin kereta rasmi exco kerajaan negeri model Proton Perdana no BKL 4000 dengan meninggalkan nota ugutan yang diikat pada seketul bata pada 17/12/2008, dan juga menghantar beberapa beberapa individu untuk memujuk saya keluar dari Parti Keadilan Rakyat, yang terbaru sekali beberapa hari yang lalu, dengan beberapa tawaran lumayan.

Perkembangan peristiwa yang menimpa dua orang teman exco KeADILan di Perak telah menyebabkan saya tampil untuk membuat kenyataan akhbar ini.

Saya khuatir, sekiranya saya tidak tampil ke hadapan untuk membuat pernyataan secara terbuka ini, keselamatan dan ketenteraman saya dan keluarga saya akan terus diganggu, diugut secara jenayah serta dipujuk untuk memastikan saya berpindah parti.

Saya juga mendesak agar pihak polis akan segera membuat siasatan terhadap ke semua laporan-laporan polis yang telah saya buat sejak Mac, 2008 dan mengambil tindakan segera dan tegas bagi menjamin keselamatan saya dan keluarga saya.

Ini semua akan membolehkan saya mampu berkhidmat dengan lebih baik dan berkesan selaku ahli exco kerajaan negeri Kedah dan ahli dewan undangan negeri Bukit Selambau, tanpa sebarang gangguan terhadap saya dan keluarga saya.

* Arumugam a/l Vengatarakoo ialah ADUN Selambau, merangkap Exco Kerajaan Negeri Kedah Darul Aman
Bertarikh 2 Feb 2009 _

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Good for those who didn't take the bet.

In the latest development, Arumugam resigned as exco member but still maintain his position as Assemblymen.

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Kedah State Exco Resigns But Keeps His Bukit Selambau State Seat

ALOR SETAR, Feb 9 (Bernama) -- Kedah Exco member V.Arumugam has relinquished his post but will continue as Bukit Selambau state assemblymen, Kedah Menteri Besar Datuk Seri Azizan Abdul Razak announced today.

-- BERNAMA

* Update: 6:30 pm

Rocket exploded; Nger, Nga, Nuar put to task

DAP had started doing some damage control and turning the hopping of its Assemblyman for Jelapang, Hee Yit Foong.

It was reported yesterday in The Star of party workers doing a signature campaign at the Jelapang market to demand the resignation of former DAP turned Independent Assemblyman for Jelapang, Hee Yit Foong.

She is being rubbished on the blog and by opposition politicians to have left DAP for the frivolous reason of being denied the official Camry car in her capacity as Deputy Speaker of the Dewan Undangan Negeri.

There maybe some truth on the car but the denial of her official car was merely the spark that ignite the room already filled with fuel gas. There is a major exposion in the Rocket party, DAP. Few days earlier, cilipadi DAP MP for Batu Gajah Fong Po Kuan in not so many words said DAP have to stop living in-denial and faceup to address internal problems beseiging the party in Perak.

The similar feature of bickering by certain quarters of Perak Malays (UMNO and partly PAS members) towards the previous Perak Government and issues within Perak DAP lies in the same person. It is the cousin duo and relatives to Chin Peng, former exco and Assemblymen Nger and Nga. Fong and Hee have been widely known to have issues with the duo.

In another exposive episode yesterday, Karpal Singh blew his top to blame Anwar for the party hopping politics that has caused the lost of Perak to BN. Without mincing his words, Karpal blame Anwar for the disarray within Pakatan Rakyat due to his party hopping politics.

Karpal went on to demand Anwar to resign as Leader of PR and that he should taubat. Wonder what Karpal meant for Anwar to seek taubat?

He also criticised the father and Son Lim for denying him as Chairman the support and giving in to Anwar in the hudud issue. He revealed that he had earlier sought for DAP to withdraw from PR following the steadfast position of PAS on hudud law.

The Sun report on Fong Po Kuan statement below:

DAP leadership must deal with internal conflicts

by Kong See Hoh, newsdesk@thesundaily.com
Feb 6th, 2009, The Sun

IPOH (Feb 5, 2009) : While accusing fingers are being pointed at DAP assemblyman for Jelapang Hee Yit Foong for deserting the party, DAP MP for Batu Gajah Fong Po Kuan(pix) says Hee's departure underlines the need for the party's central as well as state leadership to take a serious view of its internal conflicts.

She told Sin Chew Daily on Wednesday the party must deal with the internal problems of Perak DAP head-on, understand what has gone wrong and look for solutions.

Three-term Fong, dupped cili padi because of her fiery style, dropped a bombshell on the party before the general election last year with her announcement that she was not going to defend her Batu Gajah seat, but changed her mind after much persuasion from the party top leadership.

She told the daily that Perak DAP's internal problems were not taken seriously before the March 8 elections, and neither were they resolved after the elections, allowing members' discontent against party leaders to brew.

Fong said this was the reason she did not contest any post in the state in the last party elections.

It was also learnt that Hee quit the party mainly because she deemed the appointment of state exco members not transparent and because she could not get along with Perak DAP state chief and senior executive councillor, Datuk Ngeh Koo Ham, and his cousin Nga Kor Ming, who is DAP state secretary and a state exco member.

Hee, who is deputy state assembly speaker, had said the state exco should have a Chinese woman and that Ngeh and Nga, who are both lawyers, were best suited for the posts of speaker and deputy speaker respectively.

"Hee Yit Foong has been unhappy since. Her resignation from the party shows that the internal conflicts are coming to a boil," said Fong.

"The fact that the post of deputy speaker is ranked above an exco member does not help, as the exco members wield greater power and get bigger perks (than the Speaker and Deputy Speaker), the same way that ministers have more power than the parliament Speaker and Deputy Speakers."

Nger and Nga have been holding a tight grip on Perak DAP, dominance on the previous Perak Government, and made puppets of former MB Nizar. Words within the business community in Perak is that they have lined the pockets of contractors, loggers and crony businessmen with projects, contracts and concessions.

(Update) Here is a Nga making a denial below:

Nga: She's Distorting Facts

Sin Chew Jit Poh, Sunday, 08 February 2009
Translated by DOMINIC LOH/Malaysia Today

On the accusation made by BN-friendly independent state assemblywoman Hee Yit Foong that DAP had tried to squeeze her out of the party, Perak DAP secretary Nga Kor Ming said she had been distorting the facts.

Nga said during an interview with Sin Chew Daily on Satuday that DAP not only had groomed her from a largely unknown person into a state assemblywoman, but had also made her the first female deputy speaker in the country's history.

"She's real greedy. All the people in her hometown know about this, and they have openly condemned her.

"How could she say she didn't feel any pressure from the people?"

Nga said he had nothing to say if Hee insisted that she was not wrong, did not feel remorseful or ashamed of her own acts and felt that her conscience was clear.

The Star report on Karpal Singh press conference at his Georgetown, Penang office below:

Karpal asks Anwar to step down

By MANJIT KAUR
The Star, Feb 8th, 2009

GEORGE TOWN: Pakatan Rakyat de facto leader Datuk Seri Anwar Ibrahim should step down for causing trouble in the coalition, DAP national chairman Karpal Singh said.

The Bukit Gelugor MP is blaming Anwar for “creating trouble,” and said that the former deputy prime minister “needed to repent without further betraying the people and their trust.”

He said Pakatan Rakyat needed another leader, a good leader, and lashed out at PKR and DAP leaders who had fallen sway to Anwar’s rhetoric in supporting crossovers of elected representatives.

“I am not getting the support from my own party leaders, neither party adviser Lim Kit Siang nor secretary-general Lim Guan Eng, on the party-hopping issue.

“It seems that they are supporting Anwar instead of me. I am the party chairman, don’t push me too far as I still have the support of the rank and file,’’ he told a press conference at his office near here Sunday.

Asked if he was thinking of calling for an emergency meeting on the future of the party in the coalition, Karpal Singh said he was thinking of doing so.

“I can’t fight the DAP cause alone. What I am saying is the truth, and eventually the truth prevails. I have said before that DAP should seriously consider getting out of the coalition and I repeat my stand once again today.

“Party-hopping can never be justified as it can be compared with one murdering the very parents who were responsible for one’s birth merely upon one reaching adulthood,’’ he added.

He said he was confounded by how Anwar could have openly espoused and encouraged crossovers after the people gave a resounding mandate to the Pakatan Rakyat during the last elections.

He noted that Deputy Prime Minister Datuk Seri Najib Tun Razak had said that it was Anwar who started it all (party-hopping), but added that two wrongs could never make a right.

“For the record Barisan Nasional had accepted crossovers from DAP as far back as 1969, and therefore it is hypocritical for the Deputy Prime Minister to place the blame on Anwar, who in fact joined Barisan in 1981 and rose from the ranks to become the Prime Minister-in-waiting just before his expulsion from the party in 1998.

“I only hope he (Anwar) did not learn of the morality or rather immorality of political kangaroos hopping from the opposition to Barisan during the time he was in government.

“In the public interest, and in particular in the interest of Pakatan Rakyat, Anwar has a lot to answer for in creating the woes of the coalition now,’’ he added.

On the police reports lodged against him by George Town Penang Umno Youth leaders for questioning the rights of the Malay Rulers, Karpal Singh he warned those who have made these reports of the consequences of lodging false reports.

“I am warning them of the consequences ... . Enough is enough, if they want trouble then they have come to the right place,” he said in a firm tone.

Karpal said there was nothing illegal or unlawful in what he had stated in relation to the Sultan of Perak being subject to the due process of law, and that he can be sued in court for dismissing the Pakatan Rakyat state government in his official capacity.

“It has been in my view and I reiterate that view that the Sultan of Perak had acted ‘ultra vires’ to the provisions of Article 16(6) of the Perak Constitution,’’ he added.

Anwar is widely credited with knitting the different parties in Pakatan -- PKR, DAP and PAS -- into the coherent opposition that swept five states from under Barisan Nasional’s feet in the 12th general election last March.

Barisan was also denied a two-thirds majority in Parliament.

However, he spent much of his efforts after that attempting to engineer a massive defection of 31 Members of Parliament (MPs) from Barisan to the opposition, promising a Federal Government takeover by Sept 16 last year.

When that mass defection did not take place, he asked his supporters to be patient, saying it would come.

In the meantime, Anwar had become an MP after his wife and PKR president Datin Seri Dr Wan Azizah Ismail her seat in Permatang Pauh. This paved the way for the former deputy prime minister’s return to parliament after his triumph in the ensuing by-election.

He then became the official Opposition leader.

On Jan 22, Anwar trumpeted the defection of Bota state assemblyman Datuk Nasarudin Hashim who quit Umno to join PKR. Less than 10 days later, Nasarudin jumped ship again to rejoin Umno.

This led to Barisan and Pakatan both holding 28 seats each in the state legislative assembly.

This “double hop,” plus the resignations of DAP assemblyman Hee Yit Foong (Jelapang), and PKR assemblymen Mohd Osman Mohd Jailu (Changkat Jering) and Jamaluddin Mohd Radzi (Behrang), led to Barisan declaring it had the majority.

While the three declared they would remain independent, they also swore allegiance to Barisan, which led to Sultan Azlan Shah declaring Barisan the legitimate state government and declining Pakatan’s call to dissolve the state assembly and hold fresh elections.

PKR last year had proposed restoring some of the legal immunities to the royal families.

In the light of this development and for the existence of a credible opposition, PR should consider to review the political leadership, ideology and character of Anwar Ibrahim. He is not the suitable and appropriate person to lead PR.

Anwar is talented; blessed with the oratory skill, and quick wit and a genius in political manouvring. But beyond his rhetorics and politics, his ability to govern this country with a clear vision is seriously suspect. His competency and effectiveness as Minister under Dr Mahathir's Government is questionable and has yet to be proven.

Anwar is a walking encyclopaedia of inconsistencies, and lack any sense of ethics and responsibility in his politics which was marred with theatrics and drama. It is strongly believed that the party hopping was his manouvre to allay the possibility of returning to Sungai Buloh for the latest sodomy charge.

Words amongst the law enforcement are his case is as good as "signed, sealed and delivered." His only tactic left is to buy time to delay trial till after the next Genereal Election. By maintaining the current momentum of PR, many believed he hoped to save himself through winning the next General Election and form the next Government.

This ex-convict was imprisoned for power abuse and did some time for sodomy before acquited in a review by the Federal Court. This raised suspicion that Abdullah had arranged for Anwar's release. Khairy personally delivered Anwar his passport to travel to Munich for his back operation.

It is speculated that part of the deal is for the court to still confirm the sodomy act happened. Sources believed that the two male judges that favoured his release are his MCKK mates.

* Edited 11:00 AM Updated 9/2/2009 9:20 PM