How low can it go? Oil, gas prices in freefall as OPEC reels from US fracking

FoxNews.com

November 29, 2014

Drivers paying less at the pump due to free-falling oil prices can thank the U.S. energy boom for generating shale oil – and weakening OPEC’s ability to keep the cost of a gallon of gas high.

In just a matter of months, the price of a barrel of oil has dropped from more than $100 to about $70, and gas is now cheaper than it has been in years. But a recent report conducted for the American Petroleum Institute claimed oil would cost twice as much as it does now if it weren’t for America’s fracking boom, which wrings oil and natural gas out of shale miles underground.

But the next question could be whether the fracking industry can survive the low prices it brought.

“The shale boom is on a par with the dot-com boom,” Russian oil baron Leonid Fedun of OAO Lukoil told Bloomberg. “The strong players will remain, the weak ones will vanish.”

OPEC, the cartel of oil-producing nations that has historically been able to calibrate the price of oil – and ultimately gasoline – by increasing or decreasing supply, announced Thursday that it won’t fight the price skid by cutting production this time. That likely means prices will continue to fall, and the more costly production technique of fracking could become cost-prohibitive, say experts.

Drivers have benefited in recent months from the falling prices, the API study found.

“This reduction in petroleum product prices have saved U.S. consumers an estimated $63 to $248 billion in 2013 and estimated cumulative savings of between $165 and $624 billion from 2008 to 2013,” stated the report.

OPEC decision to maintain a production target of 30 million barrels a day was seen as a reflection of its members view that the short term pain was necessary to pressure rival producers in the U.S., who need moderate oil prices to break even. Saudi Arabia, the leader of OPEC, appears to be hoping to drive prices below the level at which shale oil production is economical. Experts say shale oil production turns too costly at the $60 a barrel level.

BUt other OPEC countries may not be able to withstand the steady production and the falling prices it brings. OPEC members like Venezuela and Nigeria need levels close to $100 or above to fund national budgets. Saudi rival Iran is suffering, too, with the price drop adding to huge revenue losses due to sanctions on its crude sales imposed over its nuclear program.

And Russia’s economy is in trouble, making falling oil revenues a problem there, as well.

“I think you’re going to see additional tension between the OPEC ranks,” said Jamie Webster, senior director of crude oil markets at IHS consultants.

In the U.S., gasoline prices are averaging $2.82 per gallon, the lowest price this time of year since 2009, according to the U.S. Energy Information Administration, which says the average U.S. retail regular-grade gasoline price has fallen 88 cents/gal since the start of July.

But in the U.S., consumers’ joy at pump prices falling toward $2 a gallon will be tempered by fears the burgeoning economy in places like the Dakotas, Texas and Oklahoma could be hurt by the lower cost. The industry is credited with creating nearly 2 million jobs, a number projected to double by 2035.

“If prices don’t recover soon this could be the beginning of the end of the Great American oil fracking boom,” Forbes’ Christopher Helman recently wrote. BIgger energy companies with money of their own to invest might be able to ride out the dip, but smaller, highly-leveraged oil and gas companies will have problems, he said.

                This entry was posted on Sunday, 30 November 2014, 3:32 pm and is filed under
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Oil: The Good, the Better, the Ugly

Commentary

By Alen Mattich

Wall Street Journal

Nov 28, 2014

Oil prices have fallen a long way this year. They might fall much further still.

Crude prices have fallen 36% since their summer peak, then sent into a tailspin by  the failure of OPEC, the cartel of oil producing countries accounting for 40% of global supply, to trim its output quotas. And history suggests prices can fall substantially further.

It’s worth bearing in mind that for nearly two decades to 2005, crude oil prices largely ranged between $20 and $40 a barrel in today’s money. The average inflation-adjusted price of West Texas Intermediate oil since 1970 is a little under $55 a barrel compared with a little under $70 now.

That’s not to say that’s how far they’ll drop.

A rapid technical snap-back is always a possibility. But the fundamentals seem stacked towards lower rather than higher prices for now.

Which will make for some interesting economic dynamics.

Current lower gasoline prices relative to the average of the past three years will in effect put an extra $108 billion into U.S. consumers’ pockets, according to estimates by James Hamilton at the University of California, San Diego. That’s almost a 0.8% bump in disposable personal income.

Of course, what American consumers gain from, American producers lose out on. And with energy imports making up just 15% or so of U.S. consumption, according to the World Bank, the net effect on the economy would be slightly more modest.

But consider the impact of falling oil on that other major bear story, the eurozone.

It imports about 50% of its energy use–even though the per person intensity of energy consumption is less than in the U.S.

The drop in oil prices raises another dynamic here, however. Eurozone consumer price inflation has been running a mere 0.3% a year–so close to outright deflation that it’s panicking the European Central Bank. The drop in energy prices will put even more downward pressure on inflation.

ECB President Mario Draghi could well then use the falling inflation rate to call for even more aggressive monetary measures, not least outright purchases of eurozone sovereign debt. At the same time, he’d know falling energy prices would produce a fillip to the underlying economy. In other words, the slump in oil prices potentially represents a political as well as an economic windfall for the ECB.

The flip side of the eurozone’s gains from falling oil prices is, once again, the losses to oil producers. At first sight, this might appear to be a wash for the global economy. Except it’s not.

Oil revenues tend to be concentrated in the hands of a wealthy few. Increases in oil revenues don’t cause them to boost consumption by much. By the same token, falls shouldn’t result in major drops in consumption either. On the other hand, oil consumers tend to be relatively less wealthy with relatively higher propensities to spend. So the pass-through of falling oil prices is on balance positive for the global economy–it increases aggregate demand.

What the oil wealthy do, however, is reinvest their surplus into the likes of expensive art, London property and other luxuries. So, ironically, while falling oil prices might represent a boost to global growth, they might not be so favorable to some of the world’s more inflated asset classes.

                This entry was posted on Sunday, 30 November 2014, 3:46 pm and is filed under
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Only relief of the dreary 2014 UMNO General Assembly politics of fear, hate and lies  is admission by Muhyddin that it will only take 2% shift in voter support to end six decades of UMNO rule

The only relief in the dreary 2014 UMNO General Assembly politics of fear, hate and lies is the admission by the Deputy Prime Minister and Deputy President, Tan Sri Muhyiddin Yassin that it will only take 2% shift in voter support to end six decades of UMNO rule in the country.

It is a reminder as to how close the UMNO/BN government would have been voted out in the 13th General Election in May last year, if the electoral process had been really clean, free and fair, minus all the constituency gerrymandering and the undemocratic abuses and malpractices in the country.

As Muhyiddin admitted, a loss of two per cent voter support will translate to Barisan Nasional being reduced from its  133 seats won in the 13GE to  103 federal states, less than half of the 222-seat Parliament – comprising 68 UMNO seats and 35 non-UMNO seats.

A loss of five per cent voter support would have slashed the total BN seats to 81, comprising 53 UMNO and 28 non-UMNO seats.

It is precisely because of this fear of losing Federal power which explains why the 2014 General Assembly is such a disappointment to Malaysians who had hoped that UMNO leadership would rise to the occasion to establish its claim to continued rule in Malaysia by articulating a vision for a better tomorrow for all Malaysians.

Instead, moderate, rational and patriotic Malaysians, whether Malays, Chinese, Indians, Kadazans, Ibans or Orang Asli, were subjected to a week-long torture of the politics of fear, hate and lies – holding out no uplifting vision for the future, whether for Malays or Malaysians.

The underlying, overt and covert  theme of the 2014  UMNO General Assembly was to propagate the siege mentality that the Malays and Islam are under attack.

If Malays and Islam are indeed under siege today, then UMNO which has ruled the country for 57 years with six UMNO Prime Ministers, must bear the fullest responsibility and blame.

If 57-year UMNO rule under six UMNO Prime Ministers have brought such disastrous results to the Malays and Islam, then the answer must be found in removing UMNO from Putrajaya and not in perpetuating UMNO rule at the national level!

The message at the UMNO General Assembly is that if UMNO loses in the forthcoming general elections, the Malays will be damned.

This is in fact the clearest admission by the UMNO leadership of the dismal failure of UMNO after 57 years of UMNO government through six UMNO Prime Ministers.

If UMNO had been successful in protecting the legitimate interests of the Malays and all other communities, the message it should be sending out is that whether UMNO wins or loses in the coming general elections, the rights and interests of the Malays are assured and fully protected.

UMNO leaders should ponder long and hard why they could not convey this message?

UMNO and Islam are not under siege as it is the UMNO leaders and their cronies who  are facing a “life-and-death” struggle.

The “war mongering” speech by UMNO Vice President and Home Minister, Datuk Seri Zahid Hamidi, is a repudiation of Prime Minister Datuk Seri Najib Razak’s  Political Transformation Programme, knocking out an important and essential pillar of Najib’s  National Transformation Programme.

Heedless of nation-wide protests at the “white terror” unleashed by the indiscriminate, selective and malicious prosecution of Pakatan Rakyat leaders, intellectuals and activists under the Sedition Act to create a climate of fear, Zahid boasted that 40 people were prosecuted under the Sedition Act in 2010 while 12 were charged this year alone, and  promising more prosecutions when the Sedition Act had been strengthened as announced by Najib in his UMNO presidential speech on Thursday.

It would appear that Zahid is arrogating to himself the powers of the Attorney-General, Tan Sri Abdul Gani Patail who seems to have been ousted from his powers and jurisdiction vested in the Constitution – which is probably why Gani’s promise of review of the slew of sedition charges against law lecturer Dr. Azmi Sharom and others some three months ago have ended disastrously with the Prime Minister renouncing his 2012 pledge to repeal the Sedition Act with the promise to make the colonial law even more draconian, as well as  the Home Minister’s “war cry” to launch a rampage of sedition prosecutions.

The  2014 UMNO General Assembly  has furnished live examples why the Malaysian public have no confidence in the independence, impartiality and professionalism of the law enforcement authorities, as to date, no action had been taken against either former deputy minister in the Prime Minister’s Department, Datuk Mashitah Ibrahim or Penang UMNO delegate Datuk Mohd Zaidi Mohd Said for making the most racist, provocative and incendiary hate speeches.

Mohd Zaidi had said that the Penang Chinese community had become rich off money from gambling, prostitution and entertainment outlets while Mashitah made the  completely baseless allegation that the Chinese community in Kedah had burned a Quran page-by-page during a prayer ritual.

Was it a mentally-ill Malay individual who had torn the Quran as publicly stated by the Kedah Mentri Besar, Datuk Mukhriz Mahathir or was it the Chinese community in Kedah which burned the Quran “page by page during a prayer ritual”?

Who had told a lie – Mashitah or Mukriz Mahathir?

If DAP or any Pakatan Rakyat leader had made similar provocative and baseless speech by Mashitah and Mohd Zaidi, which seriously undermined inter-racial and inter-religious peace and harmony not only in Kedah and Penang but throughout the country, the police would have pounced on the DAP or PR leader, who would be in jail within 24 hours.

Although the UMNO leadership is resorting to the politics of fear, hate and lies to save UMNO from defeat in the 14GE, sowing hatred, tension and conflict among the races and religions, it is even more important for moderate Malaysians, regardless of race, religion or region to stand up and be  counted in support of moderation and inter-racial and inter-religious peace, harmony and unity.

I believe the overwhelming majority of Malaysians regardless of race and religion are the silent majority of Malaysians  who support moderation and reject the irresponsible, extremist and intolerant politics of fear, hate and lies expounded in the 2014 UMNO General Assembly.

Let the majority of moderate Malaysians  unite in pursuit of a common Malaysian Dream of justice, freedom, equity, excellence and prosperity for all Malaysians, regardless of race, religion or region.

                This entry was posted on Sunday, 30 November 2014, 11:33 am and is filed under
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Passed over for promotions, Sarawak Dayaks seethe at civil service discrimination

by Desmond Davidson

The Malaysian Insider

30 November 2014

A list of promotions, purportedly in the Sarawak Road Transport Department, has sparked outrage among Dayak professionals and civil servants in the state over what they see as proof of discrimination against non-Malay Bumiputera in the federal civil service.

The list, which has been posted on a blog and on Facebook, names eight Malay enforcement officers as “berjaya” (successful) in securing promotions from the N27 scale to N32, while three Dayak officers were listed as “simpanan”, or reserve.

To Dayaks – as Sarawak’s indigenous people are called – the list confirms what they have felt all along and what has also been noted in the just-released Malaysia Human Development Report 2013 – that discrimination exists within the Bumiputera working in the civil service, with Malays given preference over natives.

The list was posted on November 25 on www.pengerindu.com, a blog on Dayak interests which has a wide following among Ibans, a branch of the Dayak people.

“Dayaks are only qualified to become ‘reserves’ until when? I fear the ‘tsunami of young Dayaks’ could undermine the Sarawak government if nothing is done to help the Dayaks,” wrote the author of the post, Mr J.

The post, which has been shared on Facebook, drew sarcastic and angry comments, such as Mijin Asong’s, whose original posting in the Iban language translates to “Pity us Ibans to be listed like that… this is clearly religious nepotism”.

Another Facebook user, Cobbold John, said Dayaks were “pemain simpanan (reserve players)”, while one called Ribi Rayang said: “That is the reality”.

She also joked that the abbreviation “AK” for “anak”, (or son or daughter of in traditional Dayak names) actually stood for “Awak Kemudian (you later)”.

Civil service recruitment

The Ibans, the largest Dayak ethnic group, make up about 60% of Sarawak’s population. Chinese are 25.4% and Malays 22.2%.

The Malaysia Human Development Report, however, showed that federal civil service departments had hired Sabah and Sarawak Bumiputera at “lower than their population share”.

In 2009, 6.5% of Bumiputera from Sabah, or 2,170, and 4.9% from Sarawak, or 1,631, were hired in federal departments, the report said, citing statistics from the Implementation and Coordination Unit in the Prime Minister’s Department.

This was lower than their population share at 11% for Sabah and 8.7% for Sarawak.

In the earlier years of the New Economic Policy (NEP) from 1970 and 1985, three quarters of new public service jobs went to Malays, with top positions going to Malays, the report added.

“Among bureaucrats holding the most senior government posts, 80% were Malays and 6.3% were Chinese.

“While there is no data available for Sarawak and Sabah (for that period), an examination of the list of senior government officers in the state and statutory bodies reveals a similar trend.

“It is only in the police, armed forces and resident/district offices do we see a better representation of other ethnic groups.

“It is safe to say that very little has changed since the NEP period,” stated the report, which was commissioned by the United Nations Development Programme.

By 2005, data as of June that year showed that “Other Bumiputera” – the term used by the government to denote non-Malay, non-Muslim Bumiputera – only made up 7.8% of the civil service.

Malays, meanwhile, had the highest portion at 77.04%.

But the report also acknowledged that steps had been taken to increase the non-Malay Bumiputera representation in the civil service, and that there had been an increase in recent years.

“Emphasis in the future, now should now aim to strengthen representation at the management and professional levels,” it said, warning that if not addressed, such imbalances could lead to “increased racial polarisation and perceived discrimination in our civil service”.

In 2012, figures from the Public Service Department showed that there were 1.36 million civil servants, of whom 88.9% or 1.2 million were Bumiputera, but this was not broken down into Malay and non-Malay Bumiputera.

Keeping to the Malaysia Agreement

Despite the acknowledged increase, the effect on the ground has not been fully felt.

Sarawak’s outspoken minister, Tan Sri Dr James Masing said the NEP, which was meant to give priority to Bumiputeras in the civil service, had failed to include non-Malay Bumiputera.

“When the NEP was created, it was done with the correct and noble intention. It was to give Bumiputera, the most disadvantaged group in Malaysia at that time, a launch pad to move forward.”

The federal government has also neglected its promise under the Malaysia Agreement to ensure that Sabah and Sarawak natives take charge of the federal civil service in their states, he added.

“If we consider the promised Borneonisation of the Sarawak civil service, then Dayak communities get a raw deal.

“Dayaks deserve more. We have the numbers. We have the necessary qualifications. The federal civil service mustn’t marginalise us in civil service recruitment,” Masing told The Malaysian Insider.

“Borneonisation” of the public service refers to the point in Sabah and Sarawak’s agreement at the formation of Malaysia that indigenous people from these states would be appropriately represented in the civil service.

PKR’s Ali Biju, the assemblyman for Saratok, agreed that Putrajaya ought to uphold this point in the Malaysia Agreement.

“It seems to have ended as the Malay-nisation of the civil service,” Ali said.

Ali, an Iban, said young Dayak professionals and graduates “felt marginalised”, and the posting of the promotions list, as well as the Malaysia Human Development Report, have only served to confirm the Dayaks’ suspicions that such discrimination had been happening.

“We have long suspected it and we believe it is happening at all levels of the civil service, from the top to the lowly jobs.

“We are the largest ethnic group in the state and the number of Dayaks in the federal civil service does not reflect that,” he said.

Masing, meanwhile, urged Minister in the Prime Minister’s Department Datuk Joseph Entulu Belaun to ensure that more Sabah and Sarawak natives were not only recruited into the public service but given higher posts according to their capabilities. Entulu is the MP for Selangau, in Sarawak.

“The Public Service Department is under his ministerial purview… it is my hope that he will look at recruitment along these lines to remedy the imbalance,” Masing said. – November 30, 2014.

                This entry was posted on Sunday, 30 November 2014, 8:38 am and is filed under
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The fall in the oil price is the biggest thing to happen for six months

Hamish McRae

The Independent

30 November 2014

Every swing in commodity values has winners and losers, but here there are many more winners

The fall in the oil price is big. It is big in terms of the raw numbers, a decline on the Brent reference price from above $115 (£74) a barrel as recently as June, to below $73 on Friday. We are starting to see that feed through to heating oil and the price at the pumps. But more important is the impact it has on the world economy. This is the biggest single thing that has happened in the past six months – and it comes in the nick of time, making the recovery in the developed world much more secure. Whenever there is a big swing in prices there are winners and losers, but the winners far outnumber the losers.

The basic point here is that high energy prices are like a tax on global growth. The oil price affects all energy prices and the more money that flows to the producers, the less there is in the consuming nations to spend on other goods and services.

Demand for these is lower than it otherwise would be, and growth, accordingly, is also lower. Indeed one of the reasons, not the only one of course, why the recovery has been more muted than in previous cycles, has been that we have not received the boost to growth that lower energy prices normally provide.

In most recessions, lower output has led to a fall in demand for energy, which has cut the price of it. That did not happen last time around, largely because demand for energy in China continued to rise. It has just passed the United States as the world’s largest oil importer. But now we have had a fall in the price of oil, driven not by a decline in demand but rather by an increase in supply, particularly from the US – hence the boost to growth.

Most people expected that Opec would cut production from its supposed limit of 30 million barrels a day. In the past, the response of the oil cartel has been to reduce supply when the price is weak and increase it when it is strong. Opec members do not want too high a price as that encourages diversification away from oil and the development of oil that had, hitherto, been too expensive to extract. Last week Opec decided to maintain production and you can see from the price fall quite what a surprise this was.

We don’t know the reasoning. It must have been partly because of the difficulty in getting agreement among its very diverse membership, but may also have been to put pressure on higher-cost producers, including those involved in the US shale oil boom. What we do know is that it will also put great pressure on a number of national governments that need a high oil price to balance their budgets. These include, among Opec members, Venezuela, which was apparently less than thrilled at the decision, and, outside Opec, Russia. It has been calculated that the Russian government needs the oil price at $100 a barrel. I suspect that it is somewhat lower. Still, this level of oil prices is very bad news for Vladimir Putin.

It is also, to a more limited extent, bad news for Her Majesty’s Treasury. North Sea revenues last year were £4.7bn. That is less than 1 per cent of the tax take, so they are not really material. But they will be lower this year, and any decline in revenue doesn’t help a cash-strapped chancellor.

For the rest of us, however, lower oil prices are thoroughly good news. A fall in the oil price brings down all prices, thereby increasing real wages. We feel it immediately at the pumps. But gradually it feeds through the production and distribution chains. All energy becomes cheaper, fertiliser becomes cheaper so food becomes cheaper, holidays become cheaper – and so on. We get our higher living standards, but more as a result of lower prices than larger incomes.

How big is the impact? It is hard to know because you have to make a string of rather hairy assumptions about the linkages in the world economy. If the economists cannot get their growth forecasts right a few months ahead, how can they hope to trace through a sequence that will take at least a couple of years before the full effect has moved through the system? But a calculation by the International Monetary Fund suggested that a price fall of 20 per cent would add 0.5 per cent to global growth over the next year. Well, we have had a bigger fall than that, and the impact is huge because it is acting on such a large base. Think in terms of another 50 or 100 million people in work around the world. There are social benefits as well as economic ones.

And the possibility that lower energy prices might tip places where inflation is very low into deflation? That is a profound worry in Europe, and we will hear a lot more about it in the next month or so. In headline terms, the fall in the oil price would appear to make matters worse. But European real wages get a boost from cheaper energy too, and the prospect of European deflation was entrenched long before the oil price plunged.

                This entry was posted on Sunday, 30 November 2014, 11:55 pm and is filed under
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After A Bloodbath In Oil, What Next?

Christopher Helman

Forbes

12/01/2014

Welcome back from Thanksgiving week. Apparently OPEC did something and oil prices plunged. If you were as out of touch with it all as I was last week, here’s a rundown.

As we tucked into Turkey and football last Thursday, OPEC announced no output cut, no target price and no output ceiling. Sounds like a lot of no news, but the OPEC meeting has been described in historic terms. Bloomberg’s headline declared that war had broken out: “Oil enters new era as OPEC faces off against shale; who blinks as price slides toward $70?” The accompanying article made the case that OPEC is indubitably locked in a price war against U.S. shale producers.

Oil prices plunged on the OPEC news. West Texas Intermediate crude is now at $65 a barrel. It was $107 back in June.

That Bloomberg article had my favorite quote of the week, from Leonid Fedun, a board member at Russia’s Lukoil. Fedun said that by maintaining output levels, OPEC would bring about an outright crash among U.S. shale drillers. “In 2016, when OPEC completes this objective of cleaning up the American marginal market, the oil price will start growing again,” said Fedun. “The shale boom is on a par with the dot-com boom. The strong players will remain, the weak ones will vanish.”

No surprise, Friday was a bloodbath for shares of America’s oil and gas independents.

 Goodrich Petroleum GDP -34.24% fell 34% on the day, and is off 79% in three months. Swift Energy fell 30%, Penn Virginia and Sanchez Energy SN -29.48% down 29%, SandRidge 26%. Some of these, like Swift, are highly leveraged, and there’s even some concern that bidding could dry up for the junk bonds issued in recent years to finance the U.S. oil boom — enough to cause a sudden credit crisis.

There’s plenty of stronger producers, like Devon Energy DVN -7.89%, Noble Energy NBL -8.64% and Pioneer Natural Resources PXD -10.93% have hedged a large portion of their oil production at higher prices. Drillers with land in the sweet spots of shale plays will survive the low price drubbing and may even keep growing output. And even after recent share losses, many frackers trade at solid valuations. Shares in Harold Hamm’s Continental Resources CLR -19.91% are still worth six times what they were at the nadir of the last oil price plunge in 2009.

Argus Media quoted the Iranian oil minister as saying that squeezing non-Opec production out of the market will take years rather than months.

Indeed there’s a real question as to how much pain OPEC nations and other exporters will be willing and able to endure at the hands of the Saudis. Oil journalist Derek Brower tweeted from Vienna last week that there was lots of anger at the OPEC meetings, with Algerian and Venezuelan oil ministers “furious” that the Saudis refused to cut output. An Iranian oil ministry source told Brower that Iran thinks the Saudis are trying to ruin both it and Russia.

Iran, of course, has been hobbled by sanctions, while Venezuela’s kleptocrats clearly need higher prices in order to delay the inevitable bankruptcy and collapse of their regime. There’s even evidence (reported by Bloomberg last week) that Venezuelan officials have ordered its U.S. refining and marketing operation Citgo to sell assets in secret and repatriate dollars to Venezuela.

Venezuela’s currency, the bolivar, plunged on Friday. According to Prof. Steve Hanke of Johns Hopkins University, the black market value of the bolivar has fallen from 19 to the dollar in January 2013 to 150 to the dollar last week. Hanke also notes that implied inflation in Venezuela is running at 150% a year. As bad as the shale drillers might have it, Venezuela’s got it worse.

Russia would prefer a Saudi cut too. The Moscow Times had a nice overview, reporting that cheap oil threatens Russia with recession and budget deficits and quoted Vladimir Putin as saying that if oil prices stayed below $80 for a significant length of time it would bring world economic collapse. That’s incredibly unlikely, of course. Cheaper energy, on the whole, will be supportive of economic growth and development. Just not in petrostates like Russia. On Friday the rouble fell to a record low of 50 to the dollar.

No wonder Putin’s oil champion Rosneft looks troubled; low prices will make it much tougher to service the $60 billion in debt it piled up acquiring TNK-BP last year. Rosneft shares are down nearly 40% this year.

So where’s the price of oil going and why? Who the hell knows? The global trade in oil accounts for half the value of all the world’s traded commodities and sets pricing for much of the rest. If you think you know the secret algorithm that governs that trade, you’re crazy. As Ben Hunt, chief risk officer at Salient Partners in Houston, wrote in his most recent report, “The Unbearable Over Determination of Oil,” if you add up all the myriad explanations for oil prices you can explain away the entire price move several times over. Every explanation contributes to pricing, but none contributes as much as their proponents believe.

It’s time, says Hunt, for anyone in the oil business or investing in the oil business, to understand that the market right now is “ structurally unstable” and that regardless of how and why you place your bets you need to be ready to be whipsawed and wrong.

With that in mind, here’s a few things I’m thinking about:

First of all, it’s not all about OPEC. Sure, what the Saudis decide to do has an impact on the oil markets. But remember that they decided to do nothing. No increase or decrease in production or quotas, just maintain the status quo, maintain market share.

Second, oil supplies will contract on their own. Low prices cure low prices. Drilling in the marginal shale plays will stall out. Some Canadian oil sands projects will be canceled. Cash strapped petro regimes will not reinvest scarce dollars in new drilling. Thus, in time supplies will tighten up again.

Third, cheaper oil is good for economic growth. Energy is an economic input; it’s not the economy itself, unless you’re Russia.

Fourth, don’t underestimate the impact of currency exchange rates. Venezuela, Nigeria, Angola, Russia and other exporters might be getting fewer dollars for their oil, but because their currencies have been weakening so much against the dollar, in local terms their budgets aren’t as out of whack as all the “fiscal breakeven” numbers suggest.

Fifth, over the long term the price of oil will be governed by the marginal cost of production. If demand is soft or declining, prices can remain low for some time. But as soon as the excess is worn off, the price floor will have to be high enough to incentivize the production of that last barrel needed to meet demand.

Sixth, who says $66 a barrel is cheap? The inflation-adjusted average oil price over the past three decades is closer to $40 a barrel. Reversion to the mean wouldn’t be pretty.

                This entry was posted on Monday, 1 December 2014, 8:24 pm and is filed under
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Call on Najib to make Ministerial statement in Senate on Dayak grouses about discrimination in the federal civil service

The Senate begins its 12-day budget meeting today till Dec. 18.

The Prime Minister, Datuk Seri Najib Razak should take the occasion to make a Ministerial statement in Parliament on Dayak grouses about discrimination in the federal civil service.

Najib should clarify the current controversy in Sarawak revolving around a  list of promotions, purportedly in the Sarawak Road Transport Department, which has sparked outrage among Dayak professionals and civil servants in the state over what they see as proof of discrimination against non-Malay Bumiputeras in the federal civil service.

The list, which has been posted on a blog and on Facebook, names eight Malay enforcement officers as “berjaya” (successful) in securing promotions from the N27 scale to N32, while three Dayak officers were listed as “simpanan”, or reserve.

To Dayaks, the list confirms what they have felt all along and what has also been noted in the just-released Malaysia Human Development Report 2013 – that discrimination exists within the Bumiputeras working in the civil service, with Malays given preference over natives.

The Malaysia Human Development Report  (MHDR) 2013  was commissioned by the United Nations Development Programme (UNDP) working in partnership with the Economic Planning Unit (EPU).

The Dayak ethnic group make up more than 50% of Sarawak’s population. Chinese are some 25% and Malays 22%.

The Malaysia Human Development Report, however, showed that federal civil service departments had hired Sarawak and Sabah Bumiputeras at “lower than their population share”.

In 2009, 4.9% of bumiputeras  from Sarawak, or 1,631, and 6.5% of Bumiputeras from Sabah, or 2,170, were hired in federal departments, the report said, citing statistics from the Implementation and Coordination Unit in the Prime Minister’s Department.

This was lower than their population share at 8.7% for Sarawak and 11% for Sabah.

The MHDR 2013 states:

“Between 1970 and 1985, three quarters of new public service jobs went to Malays.

“Among bureaucrats holding the most senior government posts, 80% were Malays and 6.3% were Chinese.

“While there is no data available for Sarawak and Sabah (for that period), an examination of the list of senior government officers in the state and statutory bodies reveals a similar trend.

“It is only in the police, armed forces and resident/district offices do we see a better representation of other ethnic groups.

“It is safe to say that very little has changed since the NEP period.”

The  report acknowledged that steps were being taken to increase the non-Malay Bumiputeras representation in the civil service, and that there had been an increase in recent years.

It warned that emphasis should be given to strengthen representation at the management and professional levels as such imbalances could lead to “increased racial polarisation and perceived discrimination in our civil service”.

The Prime Minister should take these grouses of Dayaks in Sarawak and the Kadazan-Dusun-Murut communities in Sabah about their inequitable representation in the federal civil service seriously, as this constitutes an important part of the Malaysian Agreement that Sarawak and Sabah bumiputeras take charge of the federal civil service in their states.

In his Ministerial statement, Najib should not only give a full account of the process of Borneonisation of the federal civil service in Sarawak and Sabah in the past 51 years since the formation of Malaysia in 1963, stating the number of federal departments which are now headed by Sarawakians or Sabahans, but also the representation of Dayaks and Kadazan-Dusun-Murut groups in the overall federal service.

Najib should also state the highest federal civil service posts ever held by Dayak and Kadazan/Dusun/Murut communities, whether there had  ever been Dayak and  Kadazan Ketua Setiausaha (KSU), to state how and to name them.

                This entry was posted on Monday, 1 December 2014, 8:50 am and is filed under
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Dr M is biggest winner at Umno general assembly

By Koon Yew Yin

Malaysiakini

Dec 1, 2014

COMMENT
 Syabas Dr Mahathir Mohamad – you were undoubtedly the biggest winner at the Umno assembly meeting. Although some observers have dismissed your influence over Umno and party thinking, you knew that your finest hour was at hand. This is why, despite being sick and possibly against doctor’s orders, you made your way to the meeting.

There, surrounded by thousands of your admirers and supporters, your cup can be said to have runneth over.

You witnessed the humiliating surrender of the prime minister in his attempt to repeal the Sedition Act. How dare Najib Abdul Razak dismantle the Act which has been one of your main weapons to ensure Umno’s supremacy in the country? Is the man so ignorant of the country’s political history that he is not aware that the selective application of the Act has enabled the party to muzzle its opponents and extend the party’s shelf life?

You had repeatedly urged its retention. To see the prime minister not only put up the white flag but also announce that the Act would be further strengthened was indeed sweet satisfaction.

As for the other leading speakers in the assembly – Muhyiddin Yassin, Khairy Jamaluddin, Shahrizat Abdul Jalil and the vice-presidents (Vps) – all of them picked up on the themes and messages you have repeatedly put out in your blog site:

*Umno is the best defence against the non-Malays,

*Umno is the only guarantor of peace and security in the country,

*Malay special position and privileges cannot be questioned, and

*The New Economic Policy (NEP) needs to go on forever until Umno decides otherwise.

You had the satisfaction of hearing one of the speakers lambast Najib’s slogan of 1Malaysia.  As followers of your blog will attest, you were the first to publicly criticise 1Malaysia. Clearly, Najib had introduced that slogan to supersede your Vision 2020. Imagine, he had the nerve to try to take down your Vision without so much as an “Excuse me!” That has really irked many of your supporters.

It was gratifying to hear one of the speakers at the assembly urge ‘1Melayu’ instead of ‘1Malaysia’. Serves Najib right for not consulting you on 1Malaysia!

Some observers have been surprised that the Umno president did not have it easy at the assembly meeting. But they forget your power and hold over the delegates. You have pointed out that you yourself “was advised to not criticise openly” and in your own words pointed out that “I had given my criticisms repeatedly behind closed doors, especially on bumiputera and Umno problems.”

But it did not work. So you have been forced to criticise openly and to advise the delegates to do the same.

Of course, the onslaught against the BN’s attempt at reform – any reform – policies should not have been unexpected. As patron of Perkasa – some say ‘godfather’ but that’s blasphemous – you had agreed to open the meeting a few days before the Umno assembly meeting so as to show the way on how to protect and ensure Malay rights.

Strategy worked brilliantly

That strategy worked brilliantly. Perkasa is now the tail wagging the dog. The Perkasa agenda is now Umno’s agenda. No Umno delegate or leader will dare to open his mouth too wide on Malay rights or racial and religious issues without getting Perkasa’s approval or prior sanction.  Government agencies will have to give priority to Perkasa’s recommendations or they will be denounced as anti-national.

And Perkasa leaders, and other Malay/Islamic leaders can continue to burn Bibles, threaten the opposition parties, belittle other religions, and engage in actions to protect Malay and Islamic special position and rights. After all they are all sheltering under the great man and Malay hero’s umbrella and they know that, protected by Dr Mahathir’s patronage, they are immune from prosecution and the reach of any law in the country.

Congratulations again Dr Mahathir.

And sorry, Malaysians who are not Umno or Perkasa members, as our former prime minister has always reminded us – “I did it my way!”  And his way is the only way – ask the former prime minister, Abdullah Ahmad Badawi, and the present one if you do not believe it.

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Falling oil prices offer the west a great chance to refashion itself. Let’s seize it

Will Hutton

The Observer

30 November 2014

With the black stuff cheaper than it has been in years, Europe’s governments must invest in their infrastructure

For the past 18 months, the world’s biggest oil producer has been the US. Saudi Arabia, eat your heart out. Courtesy of the fracking revolution, the US will maintain this new standing for the foreseeable future, according to official projections.

The world as we’ve known it for the past 50 years is being stood on its head. Which provides cause for optimism. But an international landscape increasingly dominated by nationalist firebrands, conservative zealots and policy makers in thrall to austerity economics is always apt to waste opportunities.

One first good result of this oil price shift, however, was witnessed at Opec’s meeting in Vienna last week. The once feared cartel of oil-exporting countries, with Saudi Arabia at its core, a cartel that at one time commanded more than half of global production, is now a shadow of its former self. Opec’s members were unable to agree to cut production because most are strapped for cash and had no choice but to maintain levels.

With the US needing to buy less oil on international markets and China’s growth sinking to its lowest mark for 40 years, there is now, amazingly, the prospect of an oil glut. The oil price instantly nosedived to its lowest level for four years, around $70 a barrel – down more than a third in three months.

 On Friday, there was mayhem in the markets as investors reassessed the sober prospects for oil companies, and banks suddenly realised that they were exposed to a new round of write-offs to distressed energy companies and even to governments. But although particular companies may lose out, the first-round effect of this fall should provide good news. High oil prices depress economic activity. They suck money from consumer spending and redirect it to oil-exporting countries, which typically hoard it in elephantine foreign exchange reserves or unspent  bank deposits. It is a tax by the few on the many.

It should be no surprise, then, that in the past rising oil prices were associated with recessions and falling oil prices with booms. If the oil price carries on falling back towards $50 a barrel, and if history is any guide, the western economy should respond – to the good. Already, petrol prices are below 120p a litre, with supermarkets announcing another 2p off.

The European economy, in particular, dependent on oil imports, is an obvious and immediate potential beneficiary. Suddenly, the balance of economic advantage with Russia, no less dependent on oil and gas exports, will flip. Russia’s 2014 budget was based on an oil price of $100 a barrel. At $70 a barrel, the economy will contract by at least 3% in 2015, the country will run a balance of payments deficit and the government’s finances will spin out of control.

The doubts about Putin’s foreign policy within the Russian financial, political, security and business establishment will surely increase: his hold on power is becoming less secure. The chances of Russia sustaining a surrogate war in Ukraine have suddenly been reduced. All good news.

But western governments cannot hope that economic benefits will arrive automatically. These are new times. It has been obvious since the 2008 financial crisis that the economic landscape is wholly different. Digitisation is gnawing away at established companies’ business models and empowering new insurgents at an escalating pace. And this is happening in a world in which there is a massive overhang of private debt and where banks are still nursing damaged balance sheets.

Uncertainty and fear abound. Interest rates in Britain alone have been pegged at 0.5% for more than five years. But still business is reluctant to invest, not knowing what technologies to back or not knowing how much demand there will be for new products and services. We live in an era of stagnation, “secular stagnation”, as former US treasury secretary Larry Summers has described it.

So falling oil prices offer the world economy a great opportunity. But if it is not leapt upon purposefully by aggressively expansionary economic policy, secular stagnation might worsen. Because energy prices affect all goods and services, their fall could reinforce the trend for the general price level to fall further and so accelerate deflation and all the ills that go with it.

This is the moment for the EU and the European Central Bank to throw down the gauntlet to Germany. Last week, the European Commission launched a plan with at least an eye-catching top line – to trigger an additional ¤300bn spending on vital infrastructure across the continent. Except it was a phantom ¤300bn, with Germany insistent that it should involve no extra spending by the commission, nor by governments, nor extra borrowing by the European Investment Bank. Why? Because there was an alleged risk of inflation.

However, with oil prices falling by a third in a few months, the risk is non-existent. Rather, the problem is of the opposite order: not seizing the moment to launch a genuine economic stimulus of some scale.

The world needs to be no less purposeful about how Middle Eastern politics will now play out. US engagement in the region has been driven by the need to secure its oil supplies: as it becomes an oil exporter, that need is removed. The US has played its role as global policeman unevenly and often counterproductively. But at least it has played it, acting as some constraint on Israel, mindful that war will damage the flow of oil to the US.

An isolationist, disengaged US would be much more worrying. Into the vacuum would step a new array of nationalists, terrorists and religious fundamentalists. China will become the new great power in the Middle East, involving itself in a region with now declining oil revenues, intensifying rivalries and endemic religious enmities.

Ukip and the Tory Eurosceptic right complacently invite Britain to deal with the world as it once was, in an imagined utopian past. No need to counter stagnation either as a country or together with others; we British can act alone in a world where economic growth is certain. No need to marshal what remains of British power together with others to create international architecture that forces common responses to common problems. The world is safe and everybody is our potential trading partner. An oil price that falls a third in a few months is a reminder of just how perilous our new world is – and how vital it is to have friends.

                This entry was posted on Monday, 1 December 2014, 12:02 am and is filed under
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Inside the Islamic State’s capital: Red Bull-drinking jihadists, hungry civilians, crucifixions and air strikes

Mark Townsend

The Observer

30 November 2014

Activists tell of the Isis elite living in relative luxury as civilians face poverty, hunger, inflation and power shortages

The beleaguered inhabitants of Raqqa, self-proclaimed capital of the Islamic State (Isis), are suffering widespread hunger, crippling inflation, chronic power shortages and poverty so acute that emergency soup kitchens have been set up.

With no journalists, local or foreign, able to operate inside Syria’s sixth-largest city, courageous local activists have given the Observer a detailed account of life under the jihadists’ totalitarian regime, a rare glimpse of everyday life in the city.

Their testimony reveals the evolution of a community brutally divided into haves and have-nots, with Isis enjoying well-resourced services including “private” hospitals and a relatively high standard of living as many residents struggle to make ends meet.

Crucifixions of Isis opponents have taken place in Raqqa’s Paradise Square, as well as frequent beheadings and lashings for offences as minor as smoking a cigarette. Abu Ibrahim Raqqawi, founder of a network of activists called Raqqa Is Being Slaughtered Silently, told the Observer: “Isis kills a lot of people, we see a lot of executions, a lot of beheadings. I have seen about five people crucified in the city. People are now calling Paradise Square Hell Square.”

Meanwhile the population is subjected to a rolling daily nightmare as the Syrian government launches air strikes in the morning, which are followed by coalition air raids in the evening.

When warplanes belonging to President Bashar al-Assad killed scores of residents last week, repeatedly targeting heavily populated areas of the city, Isis and its battery of anti-aircraft and missile defences did not fire a single round. The lack of response further enraged Raqqa’s inhabitants towards the extremists, according to witnesses.

“People are getting very angry because Isis do not shoot at the aircraft with their rockets, they just watch the people die. We have a situation where there are Syrian air strikes at the start of the day and coalition air strikes later and in between Isis is controlling and killing the people. Everybody is tired and afraid,” said Raqqawi.

The reports of the activists running Raqqa Is Being Slaughtered Silently offer an insight into how the jihadists intend to run their embryonic caliphate, which so far has around six million people under its rule in northern Syria and northern Iraq.

Raqqawi portrays a dysfunctional economy presided over by an untouchable elite with extremists able to live handsomely as thousands of civilians struggle to afford basic food. The price of bread has risen 150%, from 37p to 94p or 250 Syrian pounds since September. Meanwhile, Isis fighters boast about drinking Red Bull, also costing 250 Syrian pounds a can, and getting paid a stipend equivalent to more than 30,000 pounds of local currency a month, around twice as much as the average wage of Syrians in that part of the country.

Despite the growing disparity in living standards between Raqqa’s residents and Isis – which reportedly earns more than $3m (£2m) a day in black market oil sales – the extremists do not appear interested in distributing their wealth to win favour with the local population.

“We have something here we call kitchen relief, like a soup kitchen, which gives one free meal a day to the people and has more than 1,000 families using it. Isis do not give this kitchen anything,” said Raqqawi.

Water has also become a precious commodity, with some families forced to obtain it from the Euphrates river, according to Raqqawi, after coalition air strikes destroyed the oil refineries and power supply to the city’s water pumps. Raqqawi said that the US air strikes that began hitting the city almost two months ago have ended up adversely affecting the civilian population and not just their intended target of Isis.

Speaking from Raqqa on Friday, Raqqawi said: “The city is suffering from poverty and disease. A big problem is that all the prices inside the city have become very expensive especially after the coalition air strikes. There is no electricity, everyone is dependent totally on the generators.

“When coalition air strikes destroyed the oil refineries inside the city, prices grew threefold. The money that the people have is not enough to buy food, which has become very expensive.”

By contrast Isis, he said, are living in relative luxury. He said that their generators are permanently turned on, whereas in the rest of the city, power is restricted to between three and five hours a day.

In addition, Isis-only hospitals are staffed with the best doctors and the latest equipment while civilians frequently die due to inadequate care: “People are dying from injuries because there is no medical equipment, no supplies, no doctors, no ambulance crews. Isis have their own hospitals where they do not allow the civilians to go. These hospitals have the best medical treatment, the best doctors.”

Activists, located in safe houses dotted throughout the city, use encrypted conversations online to exchange intelligence and evade attempts by teams of hackers employed by Isis.

Among their latest plea to the international community are calls for the US-led coalition to thwart air strikes by the Syrian government by imposing a no-fly zone above the city.

On Tuesday air strikes from Syrian government warplanes targeted at least nine sites in Raqqa, including a crowded market near its museum, and heavily populated civilian areas.

The UK-based Syrian Observatory for Human Rights said the air strikes had killed at least 95 people, among them three women and four children.

Raqqawi referred to the air strikes on Tuesday as the bloodiest since the start of the 2011 revolution, describing how two buses were caught up in the attack. All the passengers burned to death. The death toll was more than 200, he said, with 170 bodies taken to the city’s last remaining public hospital; another 50 bodies were burned beyond recognition.

No one, he said, knew precisely how many residents had been executed by Isis but he said that deaths from disease were rising, although he was unaware of any deaths from starvation despite the growing issue of poverty.

Raqqa’s population is still above 200,000 despite the air strikes, and Isis is said to have a residual force of between 3,000 to 5,000 in the city, although numbers change depending on levels of fighting elsewhere in the caliphate.

                This entry was posted on Monday, 1 December 2014, 8:44 pm and is filed under
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Oil hits five-year low in longest losing streak since 2008

by Ron Bousso and Ahmed Aboulenein

Reuters

London

Mon Dec 1, 2014 9:41am GMT

(Reuters) – Brent crude oil fell more than $2 a barrel to a five-year low below $68 on Monday as investors looked for a price floor after last week’s OPEC decision not to cut production.

Both U.S. crude and Brent have fallen for five straight months, oil’s longest losing streak since the 2008 financial crisis.

“The market is still very much in panic mode,” said Energy Aspects’ chief oil analyst Amrita Sen. “Once we get over the panic, Brent prices will probably stabilise at around $65-80 a barrel in the short term.”

Saudi Arabia, the most influential member of the Organization of the Petroleum Exporting Countries last week blocked moves by some smaller producers to curb oil output in response to huge oversupply in world markets.

Brent hit a low of $67.53 a barrel, the lowest since October 2009, and was down $1.42 at $68.73 a barrel by 9.21 a.m. . U.S. crude fell $1.45 to $64.70 a barrel, having slipped to an intraday low of $63.72, the lowest since July 2009.

Oil lost more than 12 percent after OPEC’s decision last Thursday.

“The market is still looking for a new equilibrium below $70 (a barrel), which is a little surprising given that with the current prices much of the shale oil production in the U.S., or part of it, will be unprofitable,” Commerzbank analyst Eugen Weinberg said, pointing to the potential impact on investment in shale oil in the United States.

With oil prices losing about 40 percent since June, the impact is felt around the world as oil-producers from Iraq to Nigeria are revising 2015 budgets to reflect lower prices.

Iran refrained from protesting against OPEC’s decision to retain its production ceiling to maintain group solidarity, even though the move will not benefit all members, Iran’s oil minister said in local media reports.

Slower than expected growth in China’s manufacturing sector may add further downward pressure on oil. China’s official Purchasing Managers’ Index (PMI) slipped to 50.3 in November, a government study showed on Monday, lower than analyst forecasts of 50.6.

“In the fourth quarter, oil markets have lost the support of both the invisible hand of the U.S. Fed and OPEC,” Petromatrix analyst Olivier Jakob said, referring to the Federal Reserve’s move to phase out monetary stimulus for the U.S. economy.

(Additional reporting by Florence Tan in Singapore; Editing by David Goodman)

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Oil Prices Are Plunging. Here’s Who Wins and Who Loses.

Neil Irwin

New York Times

NOV. 28, 2014

While Americans were stuffing their faces with poultry Thursday, global oil markets were in chaos. And the implications are far-reaching.

The price of oil was down more than 9.9 percent Friday afternoon after the Organization of the Petroleum Exporting Countries decided it would not cut back production significantly in the months ahead.

In other words, even amid a sluggish global economy and a boom in oil production in the United States, oil-producing countries from Saudi Arabia to Nigeria to Venezuela are going to keep pumping rather than pull back on output in hopes of pumping prices back up.

The latest decline pushes oil prices in the United States under $70 a barrel; the prices were more than $100 for almost all of July. And the latest OPEC move (or non-move, as it were) suggests that it isn’t going to reverse course anytime soon.

The reporting out of Vienna, where OPEC met, points to the cartel’s playing a long-term game in which it tries to obliterate some of its American competition by letting prices fall in the hope that some American producers go bankrupt.

Indeed, the falling price of oil looks likely to be one of the dominant forces shaping the global economy in 2015. Here is an early guide to the winners and losers. The list is hardly exhaustive — though perhaps no list would be, given the unpredictable ripples caused by swings in the price of the world’s most economically important commodity.

Winner: Global consumers.
 Anybody who drives a car or flies on airplanes is a winner, as lower oil prices are already translating into lower prices for gasoline and jet fuel. Lower transportation costs will also give manufacturers and retailers less urgency to raise prices, as their costs fall.

This is, in effect, a global supply shock, the reverse of what happened with energy in the 1970s (or, to a smaller degree, the mid-2000s) when petroleum shortages and embargoes led to a sharp rise in prices. It may not last forever, but for now consumers in the United States and beyond will be winners.

Loser: American oil producers.
 One of the big open questions is just how many of the small, independent producers in the American heartland have cost structures that make them viable with oil prices in the $60s rather than the $100s. Many have relied on borrowed money, and bankruptcies are possible. But because the companies tend to be privately held (their financial details not publicly released), analysts are doing guesswork in projecting how severe the pain will be.

Loser: Oil-producing state economies.
 As the American economy has struggled to recover in the last few years, the exceptions have been oil-rich states like Texas and North Dakota, which have enjoyed low unemployment and strong real estate markets.

But is the “Texas Economic Miracle” just an artifact of high energy prices and improving technologies to extract petroleum from the ground? Or is Texas’ low-tax, low-regulation approach really the recipe for economic success? Seeing how the Texas economy fares now that prices are slumping will be a test.

Loser: Vladimir Putin.
 Russia’s economy is already facing its sharpest challenges in years, as Western sanctions imposed after Russian aggression toward Ukraine crimp the nation’s ability to be integrated in the global economy. Russia is a major energy producer, and the falling price of oil compounds the challenge facing its president, Vladimir Putin.

Winner and Loser: Central bankers.
 Anybody who has fretted that years of money-printing by global central banks will create out-of-control inflation has some egg on his or her face right now. Plummeting prices for energy and other commodities are dragging down inflation to levels that are, if anything, too low.

The falling commodity prices are actually making these authorities’ jobs harder. The overwhelming urgency across the advanced world — in the eurozone, the United States and Japan — has been to try to get inflation higher, to reach the 2 percent annual target central banks in all three places have set.

In the short run, central banks tend to look through big swings in commodity prices, viewing them as one-time events rather than permanent shifts in the rate of price increases. But to the degree those one-time shifts change peoples’ expectations about future inflation, and lead people to doubt the credibility of the central banks’ promises to keep inflation at 2 percent, it is a problem. That’s particularly true when inflation expectations are already below where the likes of Mario Draghi, Janet Yellen and Haruhiko Kuroda would prefer.

Potential Loser: The environment.
As a general rule, the cheaper fossil fuels become, the more challenging it will be for cleaner forms of energy like solar and wind power to be competitive on price. That said, the picture is a bit more complicated with this particular sell-off. Solar and wind power are sources for electricity, whereas fluctuations in oil prices most directly affect the price of transportation fuels like gasoline and jet fuel.

Unless or until more Americans use electric cars, they are largely separate markets, so there’s no reason that cheaper oil should cause a major reduction in investment in renewables. But to the degree cheaper oil means people drive more miles and take more airplane flights, the falling prices will mean more carbon emissions.

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Putrajaya claims reduced poverty but UN report shows more poor Malaysians

by Anisah Shukry

The Malaysian Insider

1 December 2014

Whether poverty has declined in Malaysia depends on how it is measured. An example is Putrajaya’s reliance on absolute poverty figures, which according to a United Nations report, results in data that does not reflect reality.

The Malaysia Human Development Report 2013 commissioned by the United Nations Development Programme (UNDP) instead says poverty is better measured against what households earn in general, rather than by a fixed minimum level.

The report measures relative poverty, which sets the threshold at half the national median income, and finds the number of Malaysians in this category has been rising since 2007, with one in five households considered relatively poor.

Absolute poverty, on the other hand, is a measurement based on the declared poverty line. In Peninsular Malaysia, this is fixed at RM763, RM912 in Sarawak and RM1,048 in Sabah.

But the relative poverty line in 2012 was RM1,813, or half of the household median income of RM3,626.

The report, released last week and prepared by Malaysian researchers, notes that in 2007, 17.4% of Malaysians were in relative poverty, and this increased to 19.3% in 2009 and 20% in 2012.

The figures fly in the face of Putrajaya’s claim to have successfully reduced absolute poverty to 1.7% in 2012, from 49.3% in 1970.

While Putrajaya relied on the declining absolute poverty rates, the UNDP report argues that relative poverty is “a better approach to assess inclusiveness”.

“Absolute poverty has decreased but relative poverty has emerged as a growing concern in recent years,” said UNDP while releasing the report last Tuesday.

“Relative poverty, which measures the number of households living with less than half of the median income, is a better approach to assess inclusiveness compared to absolute poverty, which measures the number of households living below the poverty line.”

“If poverty is measured using the relative poverty rate (defined as less than half of the median income) as suggested in the New Economic Model, about 20% of Malaysian households are considered poor,” reads the report.

This is not the first time a higher poverty line has been suggested by Malaysian researchers.

In 2010, Jayanath Appadurai, who has worked for the Centre for Policy Initiatives, told The Malaysian Insider that a poverty line of RM1,886 was more accurate.

The Pakatan Rakyat-led Selangor government, meanwhile, recently raised the state’s poverty income threshold to RM1,500 to reflect the higher cost of living in the state.

This was made in the state’s budget for 2015, which sees about 30% of Selangor’s five million residents classified as poor.

More inclusive picture of poverty

The Malaysia Human Development Report 2013 analyses the country’s current situation to spur policy reforms to ensure inclusive and equitable growth.

Among ethnic groups, the report shows higher relative poverty rate since 1989, the highest among the Malays at 19.1%, followed by the Chinese at 17.9%.

Meanwhile, the relative poverty rate in urban and rural households has remained stagnant since 1989.

“This is in contrast to the normal convention of measuring poverty using the poverty line income, where the official data show the poverty rate decreasing for all ethnic groups, as well as among the urban/rural areas,” the report says.

It argues that broadening the concept of poverty, with more emphasis on relative poverty, is “more fruitful”.

It notes that Malaysia’s lower absolute poverty rate compared to many countries with higher income and lower inequality raised questions on the suitability and plausibility of Malaysia’s poverty line.

“Aligning (poverty) measurement to international norms will certainly raise – possibly steeply – the poverty line and subsequently the poverty rate.”

The report further points out another shortcoming in the government’s method of measuring poverty: it does not indicate the different poverty rates within an ethnic group.

“For instance, although the (absolute) poverty rate for Bumiputeras in 2009 is 5.3%, the poverty rate for the Kadazan Dusun and Murut in Sabah are four times higher at about 25%.”

Even among states, the disparity in the absolute poverty rates showed “skewed distribution”, the report says.

In Sabah, the absolute poverty rate of 8.1% was significantly higher than the state with the lowest poverty rate, Malacca, at 0.1%.

The UNDP report was written by Tan Sri Datuk Dr Kamal Salih, an adjunct professor of Economics and Development Studies at Universiti Malaya, Dr Lee Hwok Aun, from the UM Department of Development Studies; and Dr Muhammad Khalid of Khazanah Research Institute. – December 1, 2014.

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The Geopolitical Impact of Cheap Oil

Martin Feldstein

Project Syndicate

NOV 26, 2014

CAMBRIDGE – The price of oil has fallen more than 25% in the past five months, to less than $80 a barrel. If the price remains at this level, it will have important implications – some good, some bad – for many countries around the world. If it falls further, as seems likely, the geopolitical consequences on some oil-producing countries could be dramatic.

The price of oil at any time depends on market participants’ expectations about future supply and demand. The role of expectations makes the oil market very different from most others. In the market for fresh vegetables, for example, prices must balance the supply and demand for the current harvest. By contrast, oil producers and others in the industry can keep supply off the market if they think that its price will rise later, or they can put extra supply on the market if they think the price will fall.

Oil companies around the world keep supply off the market by reducing the amount of oil that they take out of the ground. Oil producers can also restrict supply by holding oil inventory in tankers at sea or in other storage facilities. Conversely, producers can put more oil on the market by increasing production or by running down their inventories.

The market expectations reflected in today’s price reflect lower future demand and increased future supply. Lower demand reflects both the current weakness of economic activity, particularly in Europe and China, and, more important, the longer-term changes in technology, which will increase cars’ fuel efficiency and induce the use of solar power and other non-oil energy sources. The increase in the future potential supply of oil reflects new output produced by fracking, the development of Canada’s tar sands, and Mexico’s recent decision to allow foreign oil companies to develop the country’s energy sources.

These changes in demand and supply suggest that the future price of oil will be lower than industry participants expected until just a few months ago. Some of the recent changes in expected future demand and supply could have been anticipated earlier. But there is no way to know when attitudes and expectations will change. The historic volatility of oil prices reflects these psychological shifts as well as changes in objective reality.

Today’s oil price is also linked to anticipated future interest rates. More specifically, oil producers have an investment choice: They can increase production now, selling the additional oil at today’s price and investing the proceeds at the existing long-term interest rate, or they can leave the oil in the ground as an investment.

A low rate of interest encourages producers to leave oil in the ground. When the current abnormally low interest rates on long-term bonds rise over the next few years, it will become more attractive for producers to increase the supply of oil and invest the resulting income at the higher rate. Unless expectations about the fundamentals of future supply and demand change, the rise in the interest rate will cause oil prices to fall further.

The low price of oil is good news for the United States economy, because it implies higher real incomes for American consumers. Within the US, the lower price is transferring real income from oil producers to households, which raises short-term demand because households spend a higher proportion of their incomes than oil firms do. For the same reason, the lower price also gives a boost to aggregate demand in Europe, Asia, and other oil-importing regions.

The big losers from falling oil prices include several countries that are not friends of the US and its allies, such as Venezuela, Iran, and Russia. These countries are heavily dependent on their oil revenue to support their governments’ spending – especially massive transfer programs. Even at $75 or $80 a barrel, these governments will have a difficult time financing the populist programs that they need to maintain public support.

Although Saudi Arabia and several of the Gulf states are also major oil exporters, they differ from other producers in two important ways. First, their cost of extracting oil is extremely low, which means that they will be able to produce profitably at the current price – or even at a much lower price. Second, their enormous financial reserves allow them to finance their domestic and international activities for an extended period of time, as they seek to transform their economies to reduce their dependence on oil revenue.

A further decline in the price of oil could have major geopolitical repercussions. A price of $60 a barrel would create severe problems for Russia in particular. President Vladimir Putin would no longer be able to maintain the transfer programs that currently sustain his popular support. There would be similar consequences in Iran and Venezuela.

It is not clear whether these countries’ current regimes could survive a substantial and sustained future decline in oil prices. By contrast, it is obvious that oil-importing countries would benefit greatly – as they already are.

                This entry was posted on Monday, 1 December 2014, 9:24 pm and is filed under
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What Happens When Islamic State’s Foreign Fighters Return?

By Cam Simpson

Bloomberg Businessweek

December 01, 2014

In 1982 an Egyptian engineer and Islamist named Muhammad abd-al-Salam Faraj wrote a religious pamphlet for his brothers. It was widely distributed that year after Faraj was convicted and executed for leading the plotters who assassinated Egyptian President Anwar Sadat. Faraj titled his pamphlet The Neglected Duty. That duty was to wage jihad.

Faraj debated whether the violent struggle should primarily be local or international. He believed jihadis have a duty to overthrow secular regimes in Arab and Muslim lands before striking against “non-believers” in other countries. In his pamphlet, Faraj framed his answer to the local vs. global debate this way: “To fight an enemy who is near is more important than to fight an enemy who is far.” The phrases “near enemy” and “far enemy” are still used by jihadi groups today as they debate what paths to take.

That issue amounts to far more than an ideological debate in the corridors of U.S. intelligence agencies and their counterparts in Europe. Record numbers of jihadis have been crossing international borders to volunteer with Islamic State and other groups in the fight against “near enemies” in Syria and Iraq. Security chiefs on both sides of the Atlantic, especially in Europe, say they are consumed daily with trying to track and stop them. Already, some have allegedly been involved in plotting or carrying out attacks against the “far enemy” in the West after returning home.

Only about 100 of the foreign fighters are believed to be from the U.S., but American intelligence officials estimate that about 15,000 foreign fighters have gone to the war zone, with some 2,000 originating in Western countries. An estimated 1,600 come from just three of the U.S.’s closest allies in Europe—the United Kingdom, France, and Germany. Passport holders from those nations do not need visas to enter the U.S.

Al-Qaeda’s 9/11 operation, the deadliest terrorist attack in history, was led by a small cadre of jihadi volunteers like many of those leaving Europe for the fight today. They traveled east from Germany to Afghanistan 15 years ago, also determined to fight a near enemy in a Muslim country.

No one worried much about the spread of international terrorism when Osama bin Laden first arrived in Afghanistan in 1980 at the age of 23. After the fighting, bin Laden established bases in Afghanistan as a sort of hub for what he envisioned as a continuing struggle. Three additional jihadi generations, or waves, have followed, says Mohammed Hafez, who has studied them for years. He is chairman of the Department of National Security Affairs at the Naval Postgraduate School in Monterey, Calif. The Afghan veterans returning to their home nations—or moving to Europe—inspired a second generation to attend camps that bin Laden established in Afghanistan after the Soviets withdrew. Many in the second generation aimed to fight near enemies ruling over Muslim populations in the Caucasus or the Balkans.

When a third, larger generation of global jihadis was drawn to Iraq to fight American forces after the U.S. invasion in 2003, Hafez worried about both the experience they gained and the extremism they exhibited. Some beheaded their enemies while others executed complex attacks against the world’s most professional military, conducted kidnappings and assassinations, and networked with experienced military operatives, smugglers, and other radicals. To Hafez, they seemed far more dangerous than their radical forefathers.

Still, Hafez retained a glimmer of hope when he studied the problem as the U.S. occupation of Iraq was winding down: It was unlikely that those volunteers would find a safe haven inside Iraq or neighboring states from which to plan and launch global operations—the way the first two jihadi generations had managed to do across a swath of Afghanistan and Pakistan.

Now even that small hope has been extinguished. The fourth and current wave, drawn to the human catastrophe that unfolded during more than two years of civil war in Syria, has found its own safe haven as Islamic State carved out and declared a nation across two countries. “I could have never imagined then,” Hafez says, “that it would be this bad.” The group delivered a fresh reminder recently of its brutality when it announced the beheading of an American Muslim convert and aid worker named Abdul-Rahman Kassig, previously known as Peter.

Thomas Hegghammer last year published “Should I Stay or Should I Go?” Probably the most extensive review undertaken of jihadis, his study looked at those who engaged in violence at home vs. those who traveled abroad—and what happened when jihadi travelers got home. Hegghammer, director of terrorism research at the Norwegian Defence Research Establishment in Oslo, found that radicals far preferred traveling to fight near enemies in Muslim lands. He also conservatively estimated “blowback,” or the rate at which returnees plotted or committed violence once home. His finding: Not more than one in 9 returning jihadis appears to engage in, or to plot, violence.

Based on his work, Hegghammer believes that the threat posed by foreign fighters today has been over-hyped, especially in the media. Still, he is very concerned. “The problem with Syria is the scale, the number of people going,” Hegghammer says. “Even if the blowback ratio is low from Syria, the absolute numbers are going to be relatively high. … We are going to have radical Islamic communities in Europe for another generation—substantial ones.”

Dozens of volunteers returning from Syria and Iraq already have been arrested across Europe, some allegedly after having plotted or been involved in violence. In London last month, Scotland Yard Assistant Commissioner Mark Rowley issued an unusually detailed statement warning that his agency was running at an exceptionally high pace to try to counter threats. He said there were 100 preventive law-enforcement actions each week related to Syria and Iraq, as well as 218 terrorism-related arrests as of mid-October.

The range of arrests in Europe is wide. At one end of the spectrum is a French-Moroccan veteran from the fighting who was charged in Belgium with murdering four people in May, when he fired an automatic weapon into the Jewish Museum in Brussels. At the other end are three German volunteers allegedly sent home by the Islamic State to buy supplies for the group, rather than to attack Germany. Perhaps more than any other nation in Europe, Germany remains haunted by the challenge of tracking jihadi volunteers. It is home to a man who has arguably lived more intimately than anyone else with the task.

Manfred Murck, who has thick waves of salt-and-pepper hair, turned 65 this year, the mandatory retirement age for his job as head of state intelligence and security in Hamburg. When he retired in July, he also was in charge of coordinating the intelligence and security services across all 16 German states. A sociologist by training, Murck has a warm smile and a gentle demeanor, more akin to a favorite liberal arts professor than a brooding intelligence chief from a John le Carré thriller.

He greeted me on a sunny Sunday afternoon in October at Hamburg’s main train station, Europe’s second-busiest, to talk about the challenges. We made the short walk from the station, up Steindamm, a big street, to a drab office building that formerly housed a radical mosque on its second floor, above a gym frequented by bodybuilders. Mohammed Atta, then a student at Hamburg’s technical university, first came together with a group of like-minded young men at the mosque more than a decade and a half ago, when Murck was the deputy state intelligence chief.

Atta and three friends left Germany in November 1999 for a training camp in Afghanistan without the knowledge of Murck or other German authorities. They were interested in joining the Chechen jihad. After they arrived at a camp in Kandahar, bin Laden and fellow al-Qaeda leaders found the men ideally suited for what they were calling “the planes operation.” It required only a few technically adept operatives who could speak English and were comfortable living in the west. Al-Qaeda prepared Atta and the others and quietly sent them back to Germany in early 2000 without drawing notice from Germany’s intelligence establishment.

Murck and his agency were already spying on the mosque above the gym on Steindamm, which was known as the al-Quds Mosque, after the Arabic name for Jerusalem. The agency was even eavesdropping on the phone of the mosque’s most notorious radical, a Syrian-born jihadi who had trained at a bin Laden camp in Afghanistan in the early 1990s and whose fiery speeches upon his return helped inspire Atta and the others to make the same journey.

Listening to one phone call to the radical’s home in February 1999, months before Atta left for Afghanistan, Murck’s men overheard mention of an address for a Hamburg apartment that the radical was visiting—No. 54 Marienstrasse. Murck’s office sent the address to counterparts in federal intelligence, then based in Cologne, but the clue was lost somewhere in between, or perhaps beyond. It wasn’t discovered anew until after the Sept. 11 attacks on New York and Washington, when Murck and the world learned that No. 54 Marienstrasse was where Atta and several members of the Hamburg cell had lived and regularly met—before and after the trip to Afghanistan and while they were planning the move to the U.S. The cell included three of the four men who piloted the hijacked planes.

“I still think to myself, ’Yes, of course, you were responsible to a certain degree,’” Murck says. “It’s always with me. But I don’t go to bed with the feeling, ’You could have ended it—you had a realistic chance to end it.’ If anybody had the chance, he is somewhere between Cologne and Washington and maybe Damascus, but not in Hamburg. Maybe I am being too self-defensive, I don’t know.”

Until his retirement a few months ago, Murck channeled his feelings about that day into almost 13 years of trying to build a better intelligence network and stronger tools for detecting and tracking jihadi volunteers moving out of Europe and then returning. He was driven in part by a desire to make sure Hamburg could never be used as a base again. He convinced authorities to close the al-Quds Mosque in 2010 after he uncovered and broke up a second, larger group of jihadi volunteers who were radicalized at the mosque before training in Afghanistan and coming back with mayhem in mind. (It appears that they returned only with encouragement from al-Qaeda’s senior leaders to launch attacks, rather than with a concrete plan.) Once again, however, their travel plans for Afghanistan were not detected before they were en route, even with a swarm of intelligence officials monitoring what was probably Europe’s most infamous prayer room.

Murck considers the current crop of jihadi volunteers dangerous and difficult to track. So far, more than 400 jihadis from Germany have gone to Iraq and Syria, according to senior U.S. intelligence officials. At least 40 from Hamburg alone are known to have tried to make the journey, Murck says.

As with Hegghammer, a key concern for Murck is that the number of jihadi volunteers is so much bigger than before, globally and locally. Unlike members of the Hamburg cell of 9/11, many of today’s jihadis carry German or other Western passports, easing their later travels if they can manage to go to war and return undetected, as Atta did. The route they follow to join Islamic State and other jihadi groups tends to offer few traces, Murck says. People with German passports travel to Turkey with ease and then pass over the porous border to Syria or Iraq without detection or passport stamps. “They have a chance, being unknown to us, to prepare something in Germany or to fly to America,” he says.

Complicating things even more now, Murck says, is that the same online tools that help intelligence agencies better track fighters also enable extremist leaders to accelerate the radicalization and recruitment process. Spies have far less time to detect, identify, stop, or track potential jihadi travelers, he says. “When they were hidden, you are in a more or less classical field of intelligence. You have to find out who phones whom, where do they meet, who is in contact. So you can do some systematic work,” he says. “Now you have more chaotic and faster processes, and I don’t think this is easier to observe, even though they are more open.”

It’s also a question of capacity, Murck says, given the number of foreign jihadis and the far larger extremist pool they’re being drawn from today. In addition to the 40 would-be jihadis who have left Hamburg for the fight in the Middle East, Murck estimates there might be 30 to 40 of which German officials are unaware. Multiplied across Europe, that number grows in significance.

One key difference today in favor of detection, Murck says, is that everyone is constantly on guard. “We did not look 15—or even 13—years ago into the scene of radical Muslims with the question: ‘Are there any people who are planning terrorist attacks?’ We did not have any assumption that they would do so,” he says. “We now look on every piece of information we have with different viewpoints about a possible terrorist attack.”

Europeans are not alone in facing these challenges. A small group of senior U.S. intelligence officials spoke to me about the difficulties inherent in detecting men such as those from Hamburg and any potential plots, as well as how the process has evolved. Speaking on the condition they not be named, four officials were keen to discuss how much better they say the intelligence community has become at disrupting potential attacks and at imagining the unthinkable.

The 9/11 Commission concluded that one of the biggest failures before the attacks was a “failure of imagination.” The lapse has been remedied in a multitude of ways, the intelligence officials say, not the least of which is a massive increase in the number of analysts and the way they have been freed of the intellectual blinders they were forced to wear in the past. One senior U.S. intelligence official told me last month that officials also are significantly better at picking up small signs of plots.

While Islamic State may be encouraging its followers to strike U.S. targets, there isn’t yet independent evidence of any centrally planned conspiracy unfolding, the senior intelligence official says. “We don’t see any indication that they have any kind of structure here [in the U.S.], or any kind of infrastructure.” He says the near enemy in Syria and Iraq looks, for now, to be Islamic State’s primary focus. “What we see at this point is very much the local, regional focus—as far as central leadership, central direction of the organization.”

Islamic State leaders have made several statements—but few direct threats—encouraging attacks against Western targets. U.S. intelligence officials have pointed to only one seemingly clear statement from the group’s leader, Abu Bakr al-Baghdadi. “Soon we will be in direct confrontation,” al-Baghdadi said during a radio address in January. “So watch out for us, for we are with you, watching.” In a propaganda video released on Nov. 16 and reporting the execution of Kassig, a balaclava-covered British member of the group known as “Jihadi John” said in his distinctive London accent that his group would soon “begin to slaughter your people on your streets.”

Murck says he worries most about the threat environment today because there’s no end in sight for the crises in Syria and Iraq. Just as we stand in view of the office building that contained the al-Quds Mosque, trucks with riot police are positioned along Steindamm and in the train station’s parking lot. He points out the broken glass exterior of a halal chicken restaurant located near a Steindamm intersection—between a predominately Arab mosque and a predominately Kurdish one.

A few days earlier, an estimated 400 Muslim extremists—some wielding knives, pipes, and other improvised weapons—attacked a group of Kurdish protesters on Steindamm, according to police. The protesters were calling for greater international action to protect Kurds under siege by Islamic State militants in the Syrian town of Kobani. Those who attacked them were supporting Islamic State’s violence in Syria with unprecedented violence on the streets of Hamburg, Murck says. It was a morphing of a near enemy fight onto the streets of a far enemy nation.

Ending the flow of fighters and the danger they pose, he says, ultimately means ending the conflict that feeds both. “The development of the militant Islamic scene in Hamburg depends on international conflicts because the most extreme guys who are here take the issue and work on it in the streets.”

                This entry was posted on Monday, 1 December 2014, 11:04 pm and is filed under
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Who is really guilty of insulting the Malays?

Mariam Mokhtar

Free Malaysia Today

December 1, 2014

Umno Baru sees the Malay mind as fertile ground for sowing the seeds of self-doubt.

COMMENT

Year in and year out, we have the predictably tense run-up to the Umno Baru General Assembly. And then, when they are gathered at PWTC, the various warlords wave their fists, insult the non-Malays, shout themselves hoarse and behave very much like little boys showing off their assets, telling one another, “Mine is bigger than yours.” After that, it is back to the status quo.

This year shows one small variation. Najib Abdul Razak is aware that his political career is nearing the end. He is attempting to prolong it by appeasing the extremists. His method is to use the Sedition Act.

The sedition clampdown has been sweeping the nation like the haze. It blankets the country and is toxic. It chokes us, reduces visibility and makes the vulnerable seriously ill. People are unable to go to work or enjoy themselves. It incapacitates us.

Since the 70s, the Malay mind has been a fertile ground for Umno Baru to sow the seeds of self-doubt. The ideas have been put into his head that he is weak, that his religion is ineffective, and that the Umno Baru brand of Islam is better. Umno Baru takes a departure from the message that the Father of Independence, Tunku Abdul Rahman, left us. The Tunku wanted Malaysia to be multiracial and secular, free from feudal bondage. Umno Baru is undoing all of his legacy.

The Malay mind is inundated, daily, with the emotional baggage of race, religion and royalty. With this continual pummelling, his confidence will eventually be eroded.

At the just-concluded assembly, Najib insulted the Malays and told them that without Umno Baru, they would be doomed. Where are the voices of the ordinary Malays to challenge him?

Najib is suggesting that Malays are weak and indolent. He knows that if Umno Baru were to cease to exist, the Malays would blossom. Umno Baru is aware that the only Malays who need protecting are themselves – the Umno-Baruputra Malays.

A few months ago, former prime minister Mahathir Mohamad called the Malays “stupid and lazy”. There was hardly a word of protest from the Malays, but the few Malays who dared to criticise Mahathir for his politics of divide and rule were branded ungrateful. Mahathir always gets away with insulting the Malays. Why? There are many Malays who are intelligent, hard-working and amiable. Again, they failed to force Mahathir to apologise.

Decades of affirmative action policies led to the problems afflicting our society, although at the same time they created the enormous Malay middle class. These middle-class Malays are silent about the various injustices and abuse of power because they think that to speak out may show disrespect.

No! It is not disrespectful, but keeping quiet may harm more Malays and other Malaysians. Our social fabric is disentangling. Our treasury is running low on funds. We do not need to wait till things get to the point of no return.

Economic pie

The archangel Gabriel brought important messages from God, but Najib’s semi-divine message is that Islam must be protected by Umno Baru. Hundreds of years of the crusades and ethnic conflicts have not wiped Islam off the world map. If Islam in Malaysia needs to protected, it needs to be protected from Umno Baru.

One of the issues which Umno Baru uses to whip up racial distrust is to claim that Malays own a small part of the economic pie, unlike the Chinese. If Najib cared to look around him, he’d find that the top positions in the ministries, civil service, universities and GLCs are held by Malays.

Houses that are worth a million ringgit are subject to discount but low-cost housing is not and the ordinary Malay is no better off than his non-Malay counterpart. Most pieces of agricultural land held by Malays are lying idle because the government has not tried to resolve the issue of inheritance and land ownership. Syariah laws mean that a piece of land may have hundreds of owners, each at loggerheads with one another about the use of the land.

How can a farmer make a profitable and meaningful profession if he faces ruin from relatives demanding a share of the profits without contributing or putting any effort into farming?

Umno Baru killed off the aspirations of many generations of Malaysians. It pushed through affirmative action policies, not to help Malays, but to benefit the Umno-Baruputras. The leaders handsomely reward selected Malays and non-Malays whom they deem worthy of their favours.

The BN coalition might as well be disbanded. The MCA, MIC and Gerakan hardly protect the interests of the minority groups. Their role is insignificant and their presence in the coalition is mere window dressing.

If the ordinary Malay finds life in Malaysia stifling, he should realise that it will get worse. One can’t read certain books, watch certain films, eat off plates which belong to a non-Muslim, consume food prepared by a non-Muslim or drink water which has come from a bottle bearing the image of a Hindu deity.

The problem with Malaysia may be the political class, but the good news is that we are the solution.

Every five years, voters have a chance to bite back. Some of us do, and yet, after every general election, we stare in disbelief when Umno Baru gets voted again to form the government. After 13 general elections, the same racist and bigoted party remains in power.

Don’t just blame the government for the mess we are in; it is also our fault. We did not protest loud enough, we did not badger our MPs more, we did not write letters to newspapers to voice our dissatisfaction. We are happy in our comfort zone and do not consider other people’s problems an issue, until they become our own. Basically, we are selfish. Perhaps our New Year’s resolutions should reflect Malaysia’s needs.

                This entry was posted on Monday, 1 December 2014, 9:09 pm and is filed under
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