Monday, March 09, 2009
Kenanga Has Its Own Economics Textbook!!!
I have cited the Citi's economic piece which hints at a possible downgrade in Malaysia's sovereign ratings if the Second Stimulus Plan is too large. It also stated that a large plan could result in a large issuance of MGS which might not be that easily digestible. Kenanga Economics came out with a kind of counter point, but one paragraph looked suspiciously troubling:
"Financing ability. Having the luxury of sizable external reserves of about 44.5% GDP ... the Government could stomach two consecutive years of fiscal deficits..."
Errr, excuse me but the foreign reserves of $91.6bn is in a totally separate account and has nothing to do with fiscal deficit spending. I am not sure which economics textbook Kenanga has but that is not how it is done. You can cite Petronas's RM72bn cash reserves and ask the government to be issued a special dividend to cover the SSP, but bloody hell, the foreign reserves is not there to be tapped. It is so mind blowing!!! I am so embarrassed for you.