The US is in a financial deep hole but it has continued to remain a safe haven. It is still regarded as the best exchange by the world, even as if its economy is near bankrupt. The continued trading for the US dollar, unfortunately, has weakened the ringgit. Last week, the ringgit was at a three year low against the dollar when it closed at 3.7175. The ringgit has fallen 16% from the decade high of 3.13 hit last April, The Star reported.
The prediction is that the ringgit would weaken further and slid to the 3.80 level in the near term. Translated that means parents with children studying the US would have to fork out more money, our purchases of American products, such as computers, would be costlier and those having to travel to the US would be more expensive. For Malaysian factories, the cost of production would be heavier when bosses are already facing a slump in orders. The weaker currency is certainly not an advantage for exports, says manufacturers. It's another bitter blow.
But Malaysia is not an exception as other currencies have been hit as well. The good news is that our foreign exchange reserves is stable at US$91.1bil. The disturbing news is that while the dollar is an international currency, it is not comfortable to learn that printing more green backs is hardly rational economics.
We can expect some serious bad news this year, with the World Bank predicting the economy crisis is the worst since the Second World War. With developed countries in financial ICU, the poor nations in Africa would be hit the most with financial aid virtually dried up. Hand outs from NGOs and aid agencies are over. That's the grim news.
At home, our politicians, the media, the bloggers and people should be spending their time talking about the economy and nothing else. Unfortunately, the financial stituation has failed to get the same emotional response as in politics. Bloggers can tell you that economic related postings evoked little response.
The unfortunate reality in Malaysia is that the political tsunami is not over after a year. The entire nation seems to be still in campaign mode. Umno is too busy with its party polls. Pakatan Rakyat is in full swing making preparations for a bigger political tsunami. The coming economy tsunami - leave it to the bankers, businessmen, economists and employers. Yes, Tan Sri Zeti Akhtar Aziz, thanks for your tight regulating of the bank industry, now we are seeing the results. But can we get back to the Democracy Tree in Perak, which is more interesting?
Some of us are wondering how much space would be devoted to the financial crisis at the Umno general assembly. As the biggest ruling party, we expect to hear in depth speeches on how we intend to grapple with the situation. It must go beyond the PM, DPM and Finance Minister II. From the People's Congress Meeting in China to the Singapore Parliament, the main agenda remains the economy. Can we hear speeches with substance on the economy and less on race from the delegates? That should be Umno's biggest agenda.
It is no longer about which ethnic community gets what when the cake is fast disappearing. But a question of putting food on the table for all races. Umno delegates should never lose sight of that because it means nothing to Umno if the economy worsens. All the oil, rubber and palm oil won't help us if there is no demand. The small holders in Felda would be affected, please remember, and they wouldn't care about what the economists says. The bottom line is that their pockets would be hit and BN would be blamed. That is the political crisis faced by ruling parties worldwide as they become casulties of the financial tsunami.