Malaysia's Most Powerful Export Brand Remains Idle

The resolution of ethnic issues in Malaysia is the key performance indicator for the rest of the world to sit up, take notice and emulate.

From a macroeconomic perspective, it is potentially the most powerful and effective intellectual export to the rest of the world due to Malaysia's unique racial demographics.

However, racial and religious problems are been resolved by old methods, old ways and half- heartedly in action notwithstanding good intentions of leaders like Badawi.

Can Malaysia export a practical solution to the world's crisis of confidence in religious and ethnic conflicts apart from the current brand of political racism and polite tolerance?

Lack of intellectual courage and creativity is always the result of lack of desire to excel in the global market of great ideas. This is why the most powerful intellectual solution to Malaysia's problems has not been explored deeply enough and remains a shadow of a vision.

Alas, those who are still content with our palm oil and electronics exports should brace ahead for 2009.

Is Keynesianism To Blame For The Global Crisis?

The source of the current financial crisis is the creation of a credit bubble caused by asset-based consumption and surplus savings from developing countries that did not have adequate channels to store their savings.

Keynesianism is basically a tool to prop up demand by spending public money when the private sector is depressed by a lack of animal spirits.

John Maynard Keynes himself admitted his policies were very short run: "In the long run, we are all dead." Thus, the inflationary policies that are currently pursued by Bernanke and other central banks will ensure that fiat currencies will eventually (in the long run of the next three years) be devalued against gold and other non-renewable energy resources.

On a related note, there is a revival of Keynesian policies with views that Obama will follow the footsteps of Roosevelt's New Deal to bring the country out of a potential depression (probability of 20%). However, the question of whether massive government spending triggered the recovery or whether expansionary monetary policy was the key success factor remains contentious.

Economics professor Tyler Cowen believes the monetarists were right in this article.

The Solution Is In The Crisis Itself

The solution to the current global economic and financial crisis is in the crisis itself. Look at the causes of the global credit crisis deep enough and you'll find the right solutions staring at you in the face.

Notwithstanding the fact that the credit crisis came from major developed nations- the U.S. and Europe, the present health of Asian economies are still very much dependent on the vitality of Western economies.

What are people in Asia most fearful about? The loss of jobs? The collapse in stock markets and assets prices? And fear of the contraction in overall wealth at all levels of society, domestic and global.

These fears may be legitimate but if you look closer, you can see that the crisis was created by a house of cards where each player in the game was linked by a desire to be rich and enjoy life based on debt and asset price inflation. The game has ended with a credit bust and the fallout is being felt throughout the world.

So if greed was the cause, then we should examine ourselves and see if we have greed dictating our lives. If lack of prudence was the cause, then we should be careful to be prudent in our finances and economic goals.