Monday, August 12, 2013

The difference between Fitch and bitch

 "We know from history that rating agencies tend to have a herd mentality – when one agency initiates a downgrade, the others follow. If that happens, it could mean a rough ride for the domestic economy." - Malaysia cannot afford another rating downgrade by Anna Taing, The Edge/fz.com
But instead of learning from that history, Malaysians start pissing in their pants at the sound of Fitch's ratings threat. Our politicians and financial experts, too, are rather quiet, perhaps cowed by the complexity of the subject or too busy making money to care. Even Anwar Ibrahim when he was our Minister of Finance, credit to him, would leap to the country's defence and vilify the ignorant foreigners and then preach about our "strong fundamentals" before signing off with his signature "Arigato". Surely Anna Taing remember those days?  
So when I was sent a link to her commentary on Twitter this morning, my immediate retort was: I smell a rat. I can't help but take Fitch with a handful of salt: Is this not, after all, the same rating agency that empowered the US economy with triple-A marks just before the sub-prime crisis just a few years ago? It's all part of history: the US went on to file a lawsuit against one of the so-called Big Three rating agencies - of which Fitch is one - for fraud! Read S&P Lawsuits: US accuses rating agency of Fraud leading up to financial crisis.  
I'm not saying we ignore warning signs. I expect our economists and financial experts to analyze and address Fitch's concerns and the concerns of any investor. MoF and Bank Negara have got to assure them that our economic is a-OK. You can't do that by keeping quiet. How I wish we still had a strong EPU; see, you can't rely on Pemandu for things like these (they might even agree with Fitch for all you know!). The facts are: our fundamentals are, indeed, strong, our GLCs (Khazanah, where are you?) have been making healthy profits, our companies are investing abroad again, and the domestic economy, while not at its strongest, is well managed. 
Leave the rest to us. Some of us think Fitch is here to wage an economic warfare. Me, I am suspicious of its timing vis-a-vis the Trans-Pacific Partnership Agreement (read TPP will be another bad pact - Dr M). History has taught us that some countries will go to great lengths - even "plant" weapons of mass destruction in enemy territories - for oil and gas, and we happen to be an oil/gas-rich country ...   
p.s. As for the difference between Fitch and a bitch, you tell me. But do read this article by Forbes: Do we need them?

18 comments:

Anonymous said...

KENYATAAN MEDIA
4 Julai 2013


Kami NGO Islam ingin menarik perhatin kerajaan dan juga masyarakat umum mengenai perlantikan Datuk Abdul Azeez Abdul Rahim sebagai Pengerusi baru Lembaga Tabung Haji oleh kerajaan. Kami berpendapat bahawa perlantikan beliau sebagai pengerusi Lembaga Tabung Haji, tidak menepati kriteria transformasi dan tidak bersifat transformatif seperti yang diwar-warkan oleh kerajaan selama ini.

Sebuah organisasi perniagaan yang mempunyai wawasan dan tujuan yang besar lagi murni serta mempunyai kaitan rapat dengan aspirasi kerajaan, Islam serta kaum Muslimin, ia sepatutnya dipengerusikan oleh seseorang yang mempunyai pengalaman yang luas dalam bidang berkaitan serta memiliki latar belakang pentadbiran perniagaan serta kelulusan akademik yang tinggi. Selain dari memiliki kriteria tersebut, untuk mengurus suatu entiti perniagaan besar seperti Lembaga Tabung Haji dengan imej Islam pula, pengerusinya memerlukan reputasi yang tinggi dengan integriti dan sahsiyah yang tinggi juga.

Maka, kami berpendapat Datuk Abdul Azeez tidak mampu membawa imej tersebut dan tidak sesuai menjadi pengerusi kerana Lembaga Tabung Haji terlalu besar baginya serta mempunyai kaitan dengan imej dan identiti Islam pula. Oleh yang demikian kami meminta kerajaan menilai semula keputusan perlantikan Datuk Azeez tersebut dan segera mencari calon baru yang lebih kompeten dengan memiliki integriti dan sahsiyah yang tinggi yang justeru dapat memelihara imej kerajaan yang bersih lagi Islamik serta dapat membawa Lembaga Tabung Haji kepada tujuan asal penubuhannya dan dalam masa yang sama dapat menyelesaikan pelbagai masalah kronik yang sedang dihadapi oleh Lembaga Tabung Haji ini.
Ismail Mina b. Haji Ahmad
Presiden
Pertubuhan Muafakat Sejahtera Masyarakat Malaysia (MUAFAKAT)

Anonymous said...

Rocky,

Check out what the US and EU had to say when the rating agencies downgraded them...loud protests as to who rates the rating agencies and how wrong the ratings were in their assessment..

GGK said...

Bru

You commented that Malaysia is rich in oil and gas, and by that token, the Malaysian economy should be in good shape, seeing as how oil and gas exports account for 30+ per cent of government revenues.

Have you considered the potential impact of shale rock gas exports from the US and other countries with large shale gas reserves? As it is, natural gas in the US is considerably cheaper than natural gas in Asia.

How long can Petronas continue to charge premium prices for it's natural gas exports?

Also, I believe that the Fitch analysis has factored in the anticipated economic slowdown in China, a very gradual recovery in Europe and a US economy that is still struggling to get on it's feet.

The dangers for an export-driven trade-dependent economy like Malaysia's is very real. The ability of domestic consumption to make up for reductions on trade and export revenues is limited.

Government finances are also constrained by the need to have attractive rates of interest for government bonds and sukuk;further, the government is dithering in bringing in a Goods & Services Tax that is long overdue and is sacrificing the need to drastically overhaul the whole subsidies regime on the altar of political expediency.

It's not just Fitch, but also Moody's and S&P that have rated Malaysia as A-.

And if you decry the whole concept of ratings, then you should ask the Malaysian government to put it's money where it's mouth is and refuse to have it's bonds and sukuk rated.

Let's see if international investors will continue to buy Malaysian government paper then.

GGK said...

Anon 5:45 pm

Maybe so, but did the rating agencies back down and change their ratings for the EU countries and the US?

Maybe, like Bru and Dr M, you are conflating rating agencies with the TPP and a sinister neocolonialist agenda!

Well, then, it looks as if China, Japan and India are also complicit in this, seeing as how they are all involved in various FTA negotiations!

So, who are the like-minded that Malaysia can call on for support? Iran? Venezuela? Bolivia? Cuba? The OIC?

Anonymous said...

Azeez rahim punya isu takkan sah sejuk kot?? memalukan kalau dia terus pimpin tabung haji, pi aja jadi pengerusi kat tempat lain, jgn tabung haji. banyak dah cerita2 pasal azeez yang x sedap didengar, dia dok kowtim dengan media bagi cerita2 yang bagus2 pasal dia je..jangan biar lama2 kat tabung haji tu, bahaya... manalah tau duit depan mata berjuta juta dia pi manipulate masyukkk sendiri punya poket....ni bukan saja kata, dah byk sgt cerita2 x manis didengar..memalukan lah woiii

Anonymous said...

Latuk Locky:

In another 2-3 years, Malaysia will have to beg for the IMF, Singapore and China for help. I have seen these sort of bravado from people in Philippines, Pakistan and Zimbabwe before - ratings are inaccurate, ratings are governed by Jews out to topple certain governments. We shall see.

By the way, if your bosses seek help from Singapore, you should tell your bosses that the typical Singapore attitude is to ask for collateral, and your bosses will have to give away Iskandar and the Tanjong Pagar land to the Singaporeans. Padan mukalah, Latuk.

Godfather

Anonymous said...

Dam*it Bru, i dare u to mention EPU and Pemandu mabuk names again in a same sentence.

Anonymous said...

eh godfarter, ada lagi kau rupanya? ingat dah mampus? masih jealous dgn Rocky lagi. DAPigs kau dah kalah la and Rocky is still enjoying himself....

Anonymous said...

Rocky never ceases to amuse especially when he fancies himself to be a specialist of one kind or another. Now he is the expert economist!

Without knowing head or tail of the purpose of rating agencies he looks for other besmirched quotes that justifies his objectives.

safiai saad said...

dear,Rocky Bru I share your concern about the rating agency assesment on Malaysia economy,but with due respect it is actually playing their role in good corporate governance.The question is our economy in A,A- position.To do that the government must be transparent and prepare for the adverse condition of uncertainty economy.
Is our economy really in sound footing.So much help is given to the rakyat which is good but the economic fundamental must be strong.The economic driver must be tangible and must response to adverse economic condition.Look at our GDP,unemployment,national debt,house hold debt,non performing loan.deficit budget,our industrial production and innovativeness.Those and many other issue made us wonder if our position will be like Greece,Spain or Italy.we may have different opinion on their rating but more importance our economics indicator must represent otherwise.It is with earnest hope that Malaysia must progress on our own mold and be able to give prosperity to our rakyat.America and Japan are rich countries but if you visit them,wooww a lot of homeless people which we called ........God bless Malaysia.

Anonymous said...

Stupid rating agencies, they are always wrong. Our economy is on a sound footing. I can tell you now that we are sound because we are making so much money. We make from the football betting, we make so much from the DVD trade, we make from the massage parlours, and we make from the liquor trade. We make from the smuggling of cigarettes and diesel.

every weekend, the turnover in our trades is over RM 1 billion, and we make half of that as net income. Who says we are going bankrupt ? We are in a win-win situation and Datuk Rocky can continue to sit in his cafe in Bangsar and smoke his cigar.

Association of Advanced Ah Longs

Anonymous said...

Anon 2:53 & Anon 6:54,

Kalau komen dlm blog saja takkan jadi apa. Apakata kita pakat semua pendeposit ugut untuk bawa keluar semua simpanan dlm TH jika Datuk Azeez tidak diganti sebagai Pengerusi TH.

Anonymous said...

Something about Singapore's rather prudent public administration:
30 years ago when I was a child, a visit to the government clinic there would cost a flat fee of $10 for all the basic types of ailments. We came from humble background but I cannot remember any of our relatives or neighbours complaining about that medical bill! Of course nowadays since they capitalized the government services medical costs have really shot upwards.
As for our Malaysia, shouldn't we be forewarned that the government may lose control of the medical budget such that some unfortunate day in the not-so-distant future surrender the whole public medical administration over to some capitalists to manage? Frankly, it is an injustice that well-to-do Malaysians should enjoy the super-subidized medical fee of RM1 to visit the government doctor. That is why truly poor people suffer long queues for basic medical procedures and operations in the heavily-underfunded hospitals. A friend of mine lost more of his leg than he should have had he not been kept waiting several months more for his diabetic surgery.
The last time I heard it was only aborigines coming out from the jungle that could hardly afford RM1 to ease his headache and bellyache.
Please pardon my bold suggestion: "Help the people but do not spoil them. And do not suffer the underprivileged to please the electorate."
Let the foreign capitalist rate us whenever they will, but let us always introspect ourselves to improve our common lot.

7 billion diesel subsidy said...

We can save 7 billion a year of Petronas money which is being given out to Chinese triads through the petrol stations every day.
There is no limit according to the Domestic Trade Ministry to how much an individual can buy diesel. Such stupid and corrupt Ministry.
It is so simple to dig a hole in your backyard and put in a steel tank.
You then only need to fill your diesel FWD for 200 ringgit and get 200 free money!.
Go back to your house fill your backyard tank and drive your empty FWD to another petrol station and get another RM200! Yeaahhh..
Our Fitch Rating will go AAA is we stop the Chinese triad from this diesel subsidy scam. Whoever thought of this free money at the stations should be shot!

The Ministry officials must be in league with the Chinese triads.

Anonymous said...

Bila rating agency beri rating bagus, kita melompat2 teriak orang putih iktiraf kehebatan kita.

Bila mereka bagi rating kurang memuaskan, kita melompat2 tuduh mereka bias-la, yahudi-la, ajenda-la...

Anonymous said...

Actually, notwithstanding Msia's financial position, HOW did the rating agencies rate subprime AAA+ prior to 2008 crash anyway?

Anonymous said...

Rocky,

The real bitch is "Life of Annie", 4th grader pro-UMNO blogger with no brain.

Anonymous said...

Mmg pon. Matahati kamu in denial --- buta.