2010 NATIONAL DEBT AT RM407 BILLION; What is the implications in layman terms?

http://www.themalaysianinsider.com/malaysia/article/national-debt-in-2010-at-rm407b-says-government-audit/

http://www.themalaysianinsider.com/malaysia/article/nine-ministries-overspent-rm3.73b-says-government-audit/

http://www.themalaysianinsider.com/malaysia/article/bonus-bonanza-at-glcs-despite-losses-says-auditor-general-report/

http://www.themalaysianinsider.com/bahasa/article/lebuh-raya-desaru-silap-kira-kos-ambil-tanah-kerajaan-pikul-rm375-juta/

http://www.themalaysianinsider.com/whatithink/article/jahabar-sadiq241011/

 The national debt consists of internal debt (owed to lenders within the country) and external debt (owed to foreign lenders). Governments usually borrow by issuing government bonds and securities (I.O.U documents) and simply borrow directly from the local money institutions.

Re-payments will then be made based on a schedule and periodical timeframe that will determine when the re-payment or installment is due and the quantum plus interest and the promised dividends.

As long as the payment schedule is met, everything is fine but when there is a default (the government not able to pay as scheduled) it is the first indication of when the situation is beginning to turn bad. The next step is to re-schedule the payment, make the re-payment amount lower by making the period longer and increase the interest which otherwise the lender will not agree. They want more money in the end of it. There whole process is similar to the Ah Long business but with all the formalities and legalities in place. Next, if the situation gets worse, the government has to borrow more money to pay the installments. The Malay phrase for it is “gali lubang, tutup lubang”. This is what in fact is going to happen now.

With the ever increasing budget, unmitigated wastages or leakages and slow growth, default in payments to the lenders is imminent.  Slow growth means the overall economic activities and productivity is low which in most part is directly influenced by the world economy. Even if I am wrong, why wait until the time comes when the UMNO/BN government can do something about it now?

The UMNO/BN government must start the austerity drive now before it is too late. It must reduce spending now when there is still room to maneuver. It is a tactical retreat; not to lose, but a necessary move to win. By the time when Malaysia needs some foreign funds to survive like Greece, it would be too late. By that time there will be mayhem. Everything in Malaysia will be owned by the foreigners because of the chain-reaction; the banks will be owned by foreigners, thus all those that borrow or depend on the banks; the loans, the business, the business ventures, homes, houses, properties, land and shares (they bought from bank loans) will all be owned by the foreigners.

Then UMNO/BN government and Bank Negara will have to obey what the foreigners say. Even the military, police, media, schools, universities and courts will have to obey the foreigners because the foreigners would be controlling the government what that happens. This is the worst nightmare but unfortunately the stark reality is there.

Now is the time when UMNO/BN must sacrifice; the greatest sacrifice by UMNO/BN to redeem all its mistakes. They can move the entire nation now to accept and go along with the austerity drive. Make it a patriotic duty of every Malaysian. Let the critics say anything they want. There will be demonstrations. There could be violence but, the mayhem could be avoided. The UMNO/BN government can consolidate all its resources now to dampen the effect. Where are the UMNO/BN think-tanks? Start thinking of the inevitable and stop thinking of making more money-making-schemes. It is like maneuvering your speeding vehicle to the sand pit to avoid an impending collision. UMNO/BN can lose the next election because of the austerity measure but Malaysia will win. Even if PR win, they have no choice but to do the same thing, they have to go on austerity drive too but then PR can put all the blame on UMNO.

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