In 1997 Dr. Mahathir Mohamad bucked the market and in so doing saved Malaysia from the fate that befell the other Asian Tigers who blindly followed one another into the Trap set for them by the IMF and those inside their various Cabinets working for Micheal Camdessus, the Chairman of the World Bank.
He achieved this by following a plan devised by James Gibb-Stuart and implemented by Nor Bin Yacoup who went on to become Malaysias Minister of Finance.
The scheme was based on a 5 point plan for self preservation:-
(1): Firstly a measure of foreign exchange control is necessary, to prevent the nations reserves, its financial lifeblood, being sucked out by speculators.
(2): Secondly, that the progressive and accelerating liberalisation of financial markets should be reversed, as this advance towards a global economy robs developing peoples of the benefits of their own national resources.
(3): Thirdly and for the same reason, there should be no inclination to privatize/piratise national assets as a device for paying off government debt.
Such assets belong to the people, and should not be put up for auction, particularly where market forces can consign them to foreign ownership. British experience of privatisation proves that selling assets to reduce the national debt is only a temporary expedient.
They can only be sold off once, and when they are gone, the cycle of debt and borrowing continues. In the matter of existing loans that have gone sour, it is impossible to generalise. But each situation must be dealt with on its merits and, wherever possible, to try and prevent the creation of acrimony and any trade reprisals that might result.
(4): Fourthly, every endeavour should be made to avoid further borrowings, particularly in the form of US dollars. The recent round of currency devaluations has shown this to be a treacherous device whereby international entrepreneurs can buy up distressed assets in the local economy at bargain basement prices.
At this stage a clear appreciation is needed of what constitutes money, wealth and resources. Even without the lure of foreign financial inflows, we must ask, to what extent is the nation impoverished? The sun still shines. The crops still ripen. The eager workman's hands and skills and energies are in no way diminished - provided he can have faith in his Government to protect his earnings and ensure an adequate reward for himself and his family for more read Lincolns 1865 Declaration handed to you at Langkawi.
(5) Even in conditions of economic crisis, the primary priority is not to pay the bankers or reassure the stock markets, but rather to see that the people are properly fed and housed.
A child dying of malnutrition in the midst of plenty is a crime against humanity and a blight on the bounty of Mother Nature. It comes, therefore, as no surprise to learn that in places like the Sudan and elsewhere in Africa that the IMF stands for Infant Mortality Fund.
That is why IMF 'bail-outs' which hinge upon further foreign borrowing, liberalisationof markets and cutbacks in social expenditure, should be rejected absolutely.
Fortunately, support for this viewpoint is finally coming through from Western sources, where the more independent-minded economists are now contending that the IMF and its harsh methodology should be drastically revised or abolished.
When we met Dato Abdul Aziz Bin Shamsudin in London, we spoke about debt-inflicted Eastern nations turning back upon themselves, looking inward at their own basic strengths and resources Malaysia can and should resort to the same measures.
THESE FIVE STEPS - Which include: Stopping the hemorrhage of national reserves by means of exchange controls; reversing the liberalisation of financial markets; rejecting the privatisation of public assets; avoiding foreign loans or further borrowing; and steadfastly maintaining social programmes, with government created debt-free money when and wherever necessary -- all of which fly in the face of IMF outrage -- will cause any charismatic leader to be smeared and ridiculed at home and abroad as the saying goes: Be ye chased as ice and pure as snow, you will not escape calumny.
Furthermore, like any Prime Minister or President he and his followers must look to their personal and governmental security, avoiding the risk of physical or political assassination and losing no opportunity to tell the public what they are doing and why they are doing it; laying it continually on the line that the current financial crisis is not hiscrisis, or theircrisis, but a crisis of Western economics and its failed monetary system which will ultimately devour the whole of civilisation if it is not resisted and amended.
Thomas Jefferson, realized too late that the Founding Fathers had also been misled, writing the following in 1815 to Treasury Secretary Gallatin: "The treasury, lacking confidence in the country, delivered itself bound hand and foot to bold and bankrupt adventurers and bankers pretending to have money, whom it could have crushed at any moment."
However, at this juncture, it is still not too late for Malaysia * to apply a workable home grown solution.
JGS. October 5th 1997.
* or Ireland folks or Ireland!