There is a saying in Malaysia - that people, ie the public tends to forget after 100 days. In the west, they say the public has a short memory. Perhaps, Lyn Jenkins is banking on this phenomenon and perhaps she thought it was time to chide the stimulus package undertaken by the Obama Administration.
So let us recap:-
1. All the economists said that the Wall Street meltdown was an unprecedented financial turmoil which was well carried by the media in the US and in every country.
2. The former chairman of the Federal Reserve described the magnitude of the financial fallout as a tsunami.
3. Its fallout was clearly stated, including in my articles herein, as leading to massive job loss, reduction in disposable income, reduction in spending, shrinking in global trade volume, contraction in gross domestic output and eventually to negatively impact growth and development. It could curtail new growth areas as well.
4. It is fact that the MNCs have lost or cut thousands of jobs around the globe and 20 million have lost jobs in China while job losses in the US and Europe number more than 5 million. It is a fact that global trade and GDP output has contracted in all countries.
5. It is a fact that the Wall Street meltdown occurred during the Bush Administration and the Bush stimulus budget was in the region of USD800 billion.
Yes, the first two points are indeed correct and actually produced or led to the resulting effects in the third point. There was no dispute about the three cardinal points during the Bush Administration during which time the gargantuan problem actually emerged. There was no dispute at that time that a massive injection of capital was necessary and required as fast as possible to save jobs and to create jobs to not only prevent the crunching impact of an economy that was feding on vicious cycle and starting in a freefall but to stimulate it and help the average American family. Not all people have forgotten that.
And people have not forgotten that the Bush Administration planned to borrow and spend about USD800 billion and tried to get that budget passed through the legislative bodies.Many will continue to hold the view or at least the grudge that Bush was mesmerized by Dick Cheney to go to Iraq to topple Saddam for the untenable and flimsy reasons and excuses that ended up in the daunting task of carrying on a prolonged war that has sucked out USD600 billion out of the US coffers. And while Bush was napping on the American economy, McCain went on to state that the American economy was strong. Or was it a Nelson's eye for the American economy and hawk's eye for the war in Iraq? These Dick Cheney Wars helped America succumb to its quiet bleeding in the Wall Street. Liquidity was evaporating fast. The US was put into a position to borrow in order to nurse and heal the wounds - indeed a most tragic inheritance, to put matters into perspective within memory again. Some historians may even want to consider the possibility that Dick Cheney was running the presidency through Bush.
In came Obama and with his team revamped the stimulus budget of about the same size, turning it into an investment for America rather than spending it away as payments for bailouts. It is steadily going into green development as well as into fueling new engines of growth into the biotech sector and to develop a knowledge-based economy. Will Jenkins dare or care to talk in such straight terms. NO. So, what is she saying?
The Jenkins talk, on careful analysis is a half-truth or less that is packaged to make the Republicans look good after the mess they left for Obama. Perhaps, it is just a cunning mass communication ploy or something that stems from pure ignorance of the recessionary trends and the power of circulation of money and the critical role of liquidity.The Asian Development Bank (ADB), like the leading central banks around the world had reiterated just yesterday that Asia's governments must spend more, not less as they reduce their reliance on export-driven growth even as they grapple with an economic meltdown that will trap tens of millions in poverty. The same goes for the US and the Europeans are doing the same.
The ADB's Chairman has stated that "the collapse in global trade has gathered momentum as export markets suffer a massive contraction." This is exactly what was predicted as one of the fallouts of the Wall Street meltdown that occurred during the Bush era. And the remedy lies in a stimulus package that better serves as an investment stimulus as the "grave situation needs more vigorous and concerted efforts to bring growth in the region back." Naturally regional managers will have to spend more time at their branches to network and manage with a more hands-on approach.
"Some governments in Asia, Japan and China, among them, are already blasting their economies with hundreds of billions of dollars in stimulus spending...and Asian economies must restructure their economies and focus more on domestic demand." National objectives must take precedence to build the nation as a vibrant and responsive corporation rather than apply money in the coffers to serve narrow agendas, keeping poverty eradication as an integral part of the economic restructuring instead of a keeping it as part of a handout policy. At the heart and core lies an excellent education system of Cambridge standards to develop and harness human brain capital. The region needs to restructure in many ways in order to create new opportunities and new engines of growth and develop new sectors to grow and prop up demand as a way to avoid the economic meltdown already affecting the region not just to avoid the impact of the Wall Street meltdown.
So, as Bush kept his watchful eye on Iraq, the Wall Street meltdown was spreading ripples in the form of tsunamis to cause meltdown in Asian economies as well and even in those economies that were not directly exposed to the sub-prime mortgage problem through its securitization across borders. Will Jenkins acknowledge that? Unlikely, simply because the human cost of the economic downturn and contraction will damage the Republicans, which is her party. Will Jenkins go on record to state that if by some quirk of law or fate, Bush could stay on for another year, his Administration would not have to borrow and spend the USD800 billion?
One thing is for certain, Bush would not have done what Obama is currently doing - undertaking to find out where the US does not need to spend in order the reduce the deficit. In Asia, the Obama wisdom is being deployed which is not about borrowing to spend on bailouts as the Bush plan had put forth to Congress, but spend to stimulate growth and spend to restructure and spend to create new engines of growth in new sectors and spend to create more of the knowledge-based economy which also means spending more on research in science to translate scientific information into knowledge for developing products for the markets.
Japan, China and South Korea are also finalizing details of an emergency USD120 billion liquidity fund for 13 Asian countries for liquidity was the one of the key factors hurt or destroyed by the Wall Street meltdown during the Bush Administration. The Wall Street meltdown sucked out liquidity and for an economy it is akin to suppressing the ability to breathe in the human body. The new PM in Malaysia, a graduate in industrial economy from Nottingham University, is also moving very industriously to make some headway to restructure the economy but whether the biotech sector, bioresource industry and green development gets sufficient emphasis to become engines of growth that can create employment for graduates and post-graduates in related sciences remains to be seen.
Fortunately, he has enough funds for a proper investment-oriented stimulus.The Jenkins talk projects the notion that "Republicans believed they could help rebuild people's savings, revitalize the housing market and create twice as many jobs as the Democrats' stimulus at half the cost" is beyond logic and sounds like the cheap talk of politicians in the third world where the talk goes no farther that idle chiding." Since when did the Republicans begin to believe that crap? Jenkins kept mum as a mummy when Bush was furiously trying to get Congress to pass his USD800 billion stimulus spending package? Where is that offer contained in black and white?Anyone that went against Bush was hounded, including those who were entrusted as officers to audit the accounts and spending relating to contracts he gave without tender. That was the era of unchecked spending and no accountability that was turning into a symbol of everything going topsy turvy in contrast to American values and the American system. But Jenkins kept mum as a mummy then but the mummy speaks now with an enigmatic paradox probably coming from the hang over of prolonged desiccation. What is that?
Jenkins says that - "Middle-class families and small businesses across America are tightening their belts and making sacrifices each and every day during this recession (which was precipitated during the Bush Administration) and Republicans believe that it is time for Washington to do the same." Wow, what a paradox. That is indeed hard to swallow because; if the Government stops spending the recession will broaden and deepen and will be more prolonged. The remedy lies in spending to invest and restructure and to increase disposable incomes to improve consumer spending to spur demand that in turn will help to increase GDP output and improve the velocity of circulation of money to create wealth. Is that so illusive that it should beg an understanding?
In order cushion the impact of the recessionary factors during a recession, in which liquidity and spending ability are the twin key factors, any corresponding expansion in spending becomes vitally important to create jobs and to maintain the momentum in the velocity of circulation of money, which when well spent creates new infrastructure and value and wealth. Maintaining liquidity in banking institutions and creating new lending programs at low interest rates therefore becomes critical for small businesses. For more money to circulate for the express purpose of creating value and wealth, Government belt tightening is then nothing more than an anti-thesis to work out of a recession and indeed could entrench it for a longer period. When money is invested to restructure the economy, it adds to its vibrancy by increasing jobs and output and enhances circulation of money. It is therefore rather unfortunate that she speaks, as she claims, for all Republicans.
The moral of the story.....a Jenkins talk though it might be aimed to hit below the belt might end up hurting one's own groins. But whatever the views, the Jenkins ideology stirs curiosity as to how her theory works in which one halfs the spending to create twice as many jobs in a recessionary environment that has precipitated a global contraction in trade and GDP. It is hoped that Jenkins and the Republicans move up the ladder from mere chiding to table their offer in public which she said was made that "curbs spending, creates jobs by cutting taxes and controls the debt." I doubt that all Republicans will step forward to own the Jenkins ideology. Few might be terrifically excited by such an idea.
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