BJCC Golf and Country Club News

If you love golf you're going to love this!  What puts a smile on your face? Golf?

Click here: YouTube - Manuel De Los Santos

BJCC management fiasco: 'Outsourcing not the fair way ...

Golfers pleads Guan Eng to intervene

Bukit Jambul Country Club fiasco

 

Golfers Protest over new Buggy Rule

 

http://komunitikini.com/penang/forced-buggy-rule-receives-backlash-from-golfers

http://www.guangming.com.my/node/125494?tid=3

(one can translate that to English....click some keys)

http://www.thesundaily.my/news/283146

Sin Chew Daily _BJCC 2

Sin Chew Daily_BJCC 1

Police Report_BJCC :

Thugs & Secuirty Guards used to guard BJCC's fairway

The Star Feb 1 & 3:

Club managing director Datuk Eiro Sakamoto said the upgrade includes the purchase of additional 60 electric buggies for hire at a fee to "make more money"!

Golfers speak out against buggy ruling

Dutuk  Dr Chatar Singh 82, a member since 1984, said the ruling was not suitable due to the club's structure. "The design was meant to enable  golfers to walk around the course as the parking lot (for the buggy) is a distance away". 

Member Tony Lim said the management also increased the buggy rental rates from RM22 to RM37 for the first nine holes. He added that using a buggy to play golf was pointless because the golfers enjoyed walking. 

Bayan Baru Barisan co-ordinator Por Joo Tee said that decision made should be a balance between profitability and corporate social responsibility. "I will write to Penang Chief Minister Lim Guan Eng, who is also Penang Development Corporation (PDC) chaiman, to look into the matter," he said when met at the club's on Wednesday. 

Japanese firm Taiyo Resort (KL) Bhd took over the club's management in 2010 and signed a leasing agreement with PDC and Island Golf Properties Bhd. 
Shttp://www.theedgeproperty.com/news-a-views/2638-lim-explains-why-taiyo-resort-got-contract-to-manage-bjcc.html


However, even at St Andrews members can still walk!

USGA Declares War on Riding!

A serious campaign to increase the number of golfers who walk is now underway by the United States Golf Association. The Golf Journal, official publication of the sport’s ruling body, launched a dramatic appeal headlined “Declare Yourself a Walker.”

Taking aim squarely against “the myths of golf cars,” David Fay, USGA’s Executive Director boldly states “We strongly believe that walking is the most enjoyable way to play golf and that the use of carts is detrimental to the game. This negative trend needs to be stopped now before it becomes accepted that riding in a cart is the way to play golf.”

The pronouncement is strong and specific, castigating those courses that have jumped on the riding bandwagon. While pointing out that the majority of U.S. courses have no policy requiring mandatory use of carts, USGA targets the more than 1000 places that do.



Returning golf back to its original nature is the century old organization’s justification for its new campaign. Putting its money where its mouth is, USGA is publishing its “Call to Arms” –an informative booklet, distributed free to the public. Titled A Call to Feet: Golf is a Walking Game, the detailed free booklet is available simply by calling USGA headquarters in Far Hills, N.J. at (908) 234-2300.

For years, individuals have been invited to become USGA members. Now, such golfers are asked to make a more serious commitment. The announcement requests that members sign and mail in the USGA Walking Member Declaration. Its text reads:

“. . .By signing this, I hereby give my oath that I will never ride in a golf cart for a round of golf unless it is forced upon me or I develop a physical condition which necessitates the use of a cart. Whenever given a choice, I will always walk.”

Members then receive a bright yellow bag tag, emblazoned with USGA’s logo, identifying the person as a Walking Member and bearing the full text of the Declaration oath.

By tradition, the USGA’s leadership has stood above commercial interests, resisting pressures to pervert the spirit and heritage of the sport. Doubtless there are people who, despite logic and evidence to the contrary, still will argue that riding is inherently faster than walking–or that rental revenue is essential to golf clubs and courses. Numerous examples kibosh these assertions, according to the USGA which has conducted many studies and thorough investigations.

For example, Pinehurst Resort and Country Club is cited, where walking and carrying your own bag is optional now on four of the property’s seven courses–1,3,4, and 5. (Walking’s still allowed on the famed Number 2 course but only with a caddie.) “It’s not slowing down play at all, and the courses are still packed. Granted, the policy hasn’t been in effect all that long, but I haven’t heard one negative comment yet.”

This trend toward providing players the opportunity to walk is expected to accelerate, as a result of USGA’s walking campaign. We encourage advocates of walking golf to pledge your oath and promote the USGA’s Walking Members Declaration!

 

RESPONSES by LC & UT

Dear BJCC Members: 

It has been brought to our attention that several unwarranted, foul-language statements/words had been sent out to people outside our members. Such are unacceptable and unwelcomed. We won't tolerate any of these.

Members understand that the platform be used to share our views and opinions. I have kept reminding everyone that we are members of a reputable club and all of us needs to try and maintain certain decorum when we wish to express certain disagreements and dissatisfaction. It is impossible to have a state where views and interpretations won't differ.

I am making a plea to all members to refrain from making any personal attacks, threatening or otherwise to people in our state government or to members of our club.

Thank you for your support and co-operation

Best Regards,
Stanley Park Feb 6, 2012

1. Liaison Council (LC) will be meeting with Dato Sakamoto on Thursday, 19 Jan 2012. We have on our agenda for discussion pertinent issues affecting members of BJCC. 

2. There has been requests that the LC have a session to meet and inform members on the outcome of the meeting and actions initiated by the LC to date. And we are happy to inform you that we have arranged to  hold this session on Friday, 20 Jan 2012 at 8pm at the coffee terrace.

Letters to BJ UT 0112

NOTICES

(1) Revised Sequence of Play

The management has informed that members will be playing  a new sequence of 9 holes golf, a combination of 4 old and 5 new holes effective from Saturday, January 1, 2012.

The sequence of play is: Holes # 10, 11, 12, 13 then followed by Holes # 5, 6, 7, 8 and 9.  In other words, Holes # 14, 15, 16, 17 & 18 be replaced by Holes # 5, 6, 7, 8 & 9 .

1. Players must play the 9 holes in sequence, no skipping of hole is allowed.
2. Tee-off time is 7.00am. Teeing off before 7.00am is strictly not allowed. Players must start from the 10th tee. They shall not commence play from any other holes.
3. Buggies are allowed to go onto fairways unless management announced otherwise.

 The above course control is being implemented during this interim period until the renovation of all the 1st Nine Hole is ready for play.

Disciplinary action will be taken against any players who infringe any of the local rules and regulations above.

(2) With effect from February 1, 2012, the 1st Nine Holes will be opened for play

1. Golf Registration counter will open at 7:00am daily.
2. Tee off time is 7:30am daily. Players must commence play from 1st Tee and not from any other holes.
3. Buggy is compulsory for all players, not for free but at a fee ranging from RM37.10 to RM95.40 with 6% Govt Tax, depending players are members, guests/visitors, playing 9 holes or 18 holes.
4. Caddy Fee - Monday~Friday: RM35.00 + 6% Govt. Tax (RM47.70); Sat, Sun. & Public Holidays: RM50.
5. Walking Golfers are allowed to play from Monday to Thursday. The tee off time is 5:00pm. Players are required to register themselves personally and to collect their starter chits. Booking can be made from 4:30pm onwards on these days (Monday to Thursday except on Public Holidays)

 (3) To cut cost effective from Monday, January 9, 2012, service at golfers' changing rooms (shower toilet) shall be closed at 8:30pm daily instead of 10:00pm normally due to few golfers using them
Members and guests who want to use shower and toilet facilities may go the swimming pool complex.
Notes: Interesting news:   

Golf courses targeted for re-development - Too valuable for golf?

  

LIAISON COUNCIL FOR THE YEAR 2012

AGM 2011

Pretty squashed egos

PGS stands for the Pretty Girl Syndrome, which some beautiful girls suffer from. Not all beautiful females suffer from this syndrome but I’m sure most guys have met our fair share of women who suffer from some form of PGS.

ONE theory that I’ve always promoted to my friends is my PGS theory. Please don’t get me wrong. I am not a Vietnam War veteran, and I have not experienced life to its fullest but let’s just say I have some stories to share.

PGS stands for the Pretty Girl Syndrome, which some beautiful girls suffer from - these girls think that “if I’m pretty, then I usually can have my way, or get out of trouble or tilt the scales in my favour”.


The symptoms obviously are - being extremely attractive, used to getting their way all the time, dislike the word “NO”, and are used to people dancing to their every whim and fancy.  They also have an ego the size of Texas, but act as if they are as humble as Mother Teresa. Sounds familiar?

I am sure many decent gentlemen have been fooled and given the run around by members of the PGS club, and I am also certain there are many girls who have been passed up for promotion or lost career opportunities because the boss chose the more attractive candidate.

I am sure you are expecting me to say, “What goes around comes around” and tell a nice story that will make one feel good or even vindicated.

Sorry folks, not today. Today, I am going to tell you that God has a funny way of teaching people humility and respect. Recently, I had the privilege of being the television host for the Miss Universe Malaysia 2010 contest. My job was to conduct pre and post audition interviews for each contestant.

The selection process was quite straightforward – walk in, fill in some personal details, answer some basic mini essay questions and impress a panel of four judges with her winning personality.

However, the final part was the most challenging, as each girl need to face the judges - comprising actor Hans Isaac, radio man Phat Phabes, 2004 Winner and National Director Andrea Fonseka and Julia Dolmotova, a Russian-born professional who has substantial experience in beauty brand marketing.

All judges were looking for candidates who were attractive, had a pleasant personality, good communication skills, intelligence and the X-Factor.

The word X-Factor sounds ex­­­tremely grey but in the entertainment world, it is about having the ability to turn heads and capture an audience. The judges’ job was to look for that big X-Factor which I am sure many of the girls thought they had.

Prior to the individual auditions, I asked many of the candidates what their main strengths were. Some of the over-confident girls answered, “I am confident, beautiful and humble. I have just what it takes.”

When I probed further and asked if that could be misconstrued as “slightly arrogant”, most of the responses was a very confident “No”.

I think they forgot what the word humble means.  In those moments, I wanted to place a PGS tag around their necks to give the judges a bit of a heads-up on what to expect.

But a colleague quickly whispered in my ear, “Just you watch, they have no idea that they are about to enter the lion’s den”.

In this type of situation, warriors fight and prove their worth, or get eaten alive. She will get eaten, but which lion will bite the hardest? The judges tore these girls apart. It was not done using the Simon Cowell method but rather the honest truth.

Hans, Phabes and Andrea used a more diplomatic approach but Julia was more direct. “NO, you don’t have it, you should do something else. You are not ready; you are not beauty queen material.” Talk about reality check.

The judges also said that some of them did not get shortlisted because they did not respect the com­petition. According to the judges, some of the girls did not come prepared, looked like they had just come from a nightclub and had the mentality that looks alone could get them through.

One judge stressed, “We are looking for a beautiful, ambitious, well-informed lady who carries herself well. That is what people sometimes forget.”

To sum it up, they are looking for someone who has class and poise. This goes to show that while there are many beautiful women in the land of Malaysia, classy women do not grow on trees.

Let this be a reminder to us all that looks can only get you so far. It can open doors but you also need skills and knowledge to keep the door open. If not, you will just be known as a “dumb blonde”, a tag which is very hard to shake off.

I am always reminded about what my friend once told her young and beautiful sister.  Her ‘big sister’ advice was that, “Even though God gave you a huge advantage with good looks, if that is all people remember you for, then you are easily forgotten.”

This friend stressed to her sister, “If you have the looks, then make sure you have the brains to go with it.” Girls who have PGS start their day by singing the song, “Mirror, mirror on the wall, who’s the fairest of them all?”

Well, I suggest they change their tune to, “Mirror, mirror on the wall, do I have the skills to do it all?”
And if I were the mirror, I would answer, “No, but please do something about it!”

A DIFFERENT SPIN
BY BEN IBRAHIM

> Ben Ibrahim is a TV host, MC and writer. He has hosted shows ranging from The Breakfast Show to the 2008 Olympic Games. For more information about Ben, log on to www.benibrahim.com

Some common-sense thinking on yuan

RECENTLY, the United States postponed its condemnation of China as a currency manipulator, pending negotiations on whether China will appreciate its yuan. Note the United States has raised hell about somebody’s exchange rates before.

Remember “Japan Bashing” when Japan’s trade surpluses allegedly implied an undervalued yen? Trade tensions ensued, Japan occasionally acquiesced, and the yen appreciated. And appreciated – 23% in 1971-73; 37% in 1977-78; 49% in 1985-87; and 20% in 1993-95. Yet the “problem” remained. Japan still had the largest bilateral surplus in 1995 – but the bashing stopped. By then, the Japanese economy was on its knees, trapped in its lost decade.

Was the ever-appreciating yen a major contributor to Japan’s economic collapse? No consensus yet, but Stanford economist Ronald McKinnon ties the “syndrome of the ever-rising yen” to Japan’s deflation trap. Whatever the final consensus, common sense dictates skepticism attends a solution that never solves the “problem.”

Think as follows: Suppose appreciation unwinds the surplus; we get bashing, cave-in (appreciation), surplus unwound, End of Story. But, suppose the surplus remains! Then a destructive dynamic is unleashed, whereby bashing equals cave-in equals unresolved surplus setting up expectations of more and more bashing and cave-ins – as long as the surplus is not resolved! The pressure on the currency then never quite stops. Bashing is a political weapon that is itself a significant problem. Now, China’s story.

In 1994, China fixed its yuan at 8.68 per dollar to stabilise a high, volatile, inflation that had reached 20% annually. It worked. Inflation fell to track US inflation. During the 1997-98 Asian crisis, China stuck to the policy despite pressure to devalue, earning itself policy credibility. After the crisis, financial stability allowed producers to focus on real improvements – productivity, quality, cost cutting. The country utilised its abundant labour to become competitive in consumer manufactures, while the advanced economies specialised in capital intensive production – standard economic theory.

So, what’s not to like?

Hordes of rural Chinese labour flooding into world markets to rise from unrelenting poverty. Hordes of US working families buying cheap consumer goods that raise living standards.

What’s not to like?
 
Enter US special interests! US mercantilists and their political, academic, and media allies point to China’s surpluses with an old playbook – currency manipulation! Undervalued yuan! Enter China-bashing! In March 2005, Congress threatened a 27.5% tariff. China acquiesced and the yuan appreciated 22% over three years, but the surplus widened! Another 20%-40% needed, came the experts! Sounds familiar? How does another Asian economy deal with the thuggish return of an 800-pound economic gorilla? First, DO NOT CAVE!

Reasons why China should not cave

● Cave-ins set up a destructive dynamic: As noted, a cave-in is counter-productive and could lead to continual pressure on the currency and more economic problems.

● Argument has no merit: Why is the yuan undervalued now, not in 1994? Why didn’t the United States protest “currency manipulation” then? Because the policy was harmless until China became too competitive for US special interests! Let’s simplify matters. Suppose Google creates a phone to compete with Apple’s iPhone. Business is slow but through innovation, cost cutting, Google makes a better product at lower price. Apple lobbies its politicians who threaten Google with legislation unless it raises (appreciates) its price and become uncompetitive or less competitive! The argument has no merit!

● Fixed exchange rates are not currency manipulation: The special interests demonise fixed rates as currency manipulation, but fixed rates were prevalent and beneficial in history! They insist that the very operations of fixed regimes – central bank buying/selling of foreign exchange to maintain the fixed rate – is proof of “currency manipulation” since it prevents currencies from reaching free market equilibrium! By that criterion, almost every country currency manipulates because most either fix or have managed floats. Thus, the criticism is feckless, asserting its conclusion, rather than arguing why free floats are best for developing economies, not fixed or managed floats.

● Free float is not right for China: Exchange rates today, under liberalised capital accounts, are forward-looking asset prices (like stock prices) driven by current and expected future fundamentals – news, sentiments, even bubbles. Thus, a free float will deliver trade balance (or unwind a surplus) only if foreign exchange demand mainly reflects import demand. But import demand is only a tiny fraction of foreign exchange demand, which reflects mostly asset flows (hedging, investment etc). Instead of trade balance, a free float will likely just introduce new problems of exchange volatility for China, with its yet thin financial markets.

● Sustained surpluses do not imply appreciation immediately required: No theory suggests such a rigid connection. People run life-long deficits with their grocers – no depreciations required! Historically, Britain ran large surpluses with the United States – with no attendant hysteria for appreciation or else! Why?

Trade balances are macroeconomic phenomena: a means of shifting consumption/investment profiles over time through borrowing or lending to the world. They are simply more significant than whether certain special interests are unhappy with the exchange rates they face.

● Caving would not solve the surplus but could cause deflation: As macroeconomic phenomena, trade surpluses will fall only if a country’s excess of savings over investment falls. But appreciation alone cannot ensure that. Falling exports from appreciation may cause incomes/savings to fall, but investments (and imports) could also fall. And if the surplus does not respond, as during Japan Bashing and in 2005-08 for China, a cave-in could set off the destructive dynamic of more expected cave-ins; and investments could easily move abroad. If China caves, its surplus likely remains but it falls into recession.

What Should China Do?

First, ignore the bashers and look inwards – will continuing current policy add great risks to asset/goods inflation or over-exposure to one borrower?

Second, hire a top US public relations firm to argue its case, reverse China’s role as an economic piñata in the US media.

Third, insist the US reforms its Social Security/Medicare/tax systems to incentivise savings.

Fourth, insist that bashing ends and make sure any policy revision cannot be interpreted as a cave-in or loss of control over China’s own economic destiny.

Comment by Dr Lim Ewe Ghee

● A graduate of Yale University and the University of California, Davis, the writer is a senior research fellow at the Center for Policy Research and International studies (CenPRIS), Universiti Sains Malaysia (USM). Previously, he was senior economist at the International Monetary Fund, Washington, D.C. The above are solely the views of the researcher, and do not necessarily represent the views of CenPRIS or USM.

Venture capital, done the Google way

MOUNTAIN VIEW, Calif.--After a little over a year in the venture capital business, Google now has 10 start-ups under its wing and plans further growth in 2010.

A mobile payments company called Corduro became the latest start-up to accept funding from Google Ventures on Monday, as fund executives hosted a wide-ranging discussion on the state of Google Ventures at Google headquarters. Google wants to invest about $100 million this year in interesting emerging start-ups, said Bill Maris, managing partner of Google Ventures.

Bill Maris, managing director of Google Ventures (Credit: Google Ventures)

Google Ventures launched in March 2009, but the company had not said very much about its activities in the intervening year. Over the weekend, Google Ventures launched a new Web site and disclosed that its team of full-time employees had grown to 16.

A company most known lately for snapping up start-ups left and right, Google has separate goals in mind when considering venture investments, said CEO Eric Schmidt. Schmidt, who is an assistant instructor for a venture capital class at Stanford University, said Google wants to emulate the strategies and tactics followed by the traditional venture capital firms that turned groves of fruit orchards in the southern Bay Area into Silicon Valley, but with a Google twist.

Google is interested in compelling start-ups that have computational problems, be they risk analysis, algorithmic processing, or some other complicated type of numerical challenge that is hard for a small company to pull off but second nature to Google. Companies that accept investment from Google can draw upon individuals from among Google's engineering team for specific needs: one Google user-interface design engineer, Braden Kowitz, helped an image-recognition company called Pixazza improve the usability of their Web site and tools.

This is a completely separate project from Google's mergers and acquisitions team, Schmidt said. When Google buys a company it's usually because a project team has identified a need and researched the available companies, or when an interesting company reaches out to Google looking to get bought, he said.

Venture investing, on the other hand, involves "new speculative high-risk investments," Schmidt said. It's also distinct from the investments Google has made through its Google.org arm or the energy investments it has made in that it is being run with a for-profit mentality, he said. Schmidt also moonlights as an investor in Tomorrow Ventures, which does not list him among its partners but which he mentioned briefly to clarify that it was a completely separate operation from Google Ventures.

Google accepts employee recommendations for potential investments, reasoning that its employees are in tune with innovative start-ups in their respective fields.

"Googlers know a lot of people, and the employee base that Google Ventures can tap are people who understand subtleties that the average VC firm can't tap," Schmidt said. "That doesn't mean we are better investors, but it means we understand this stuff."

So where is Google putting its dollars? So far, Google Ventures has put money into start-ups that align with Google's broader interests, such as OpenCandy, a software-distribution and ad network, and English Central, which analyzes video on the Web to help students learn English.

But there is no overarching goal or philosophy behind Google Ventures, Maris said. Google's leadership triumvirate (Schmidt and co-founders Sergey Brin and Larry Page) does not decide where specific investments are made, although they do set the budget for the fund, which will likely vary on a year-to-year basis.

Still, Maris was mildly surprised to learn for the first time during the roundtable discussion that Schmidt wants Google Ventures to expand overseas in the near future.

Right now, mobile applications are the hot venture investment area because of the low cost of capital needed to get a couple of developers off the ground and the potentially high reward as mobile technologies continue to develop. Google is obviously eyeing that trend with investments like Corduro, but it's important to avoid a "herd mentality" when it comes to venture investing, Maris said. Schmidt took great pains during the discussion to paint Google Ventures as something complementary--rather than competitive--to the existing venture capital industry. Google has plenty of money and technological expertise but it does not have nearly the experience that seasoned VC firms bring to the table, he said.

However, Google Ventures can learn a lot from those firms, he said.
"Venture is a phenomenal achievement of America. My entire life has been defined by the people who created the venture industry," Schmidt said.

Tom Krazit writes about the ever-expanding world of Internet search, including Google, Yahoo, and portals, as well as the evolution of mobile computing. He has written about traditional PC companies, chip manufacturers, and mobile computers, spending the last three years covering Apple. E-mail Tom.

Be careful when you send e-mails, you can get into trouble!

Never underestimate the power of e-mail

HAVE you ever written an e-mail about someone and sent it to the same person when your intention was to send it to somebody else?

Have you written an angry e-mail and decided that it would be better not to send it, and then accidentally press the “Send” button anyway?

Are you still naive enough to think that anything inappropriate you send out will not come back to haunt you one of these days?

Goldman Sach’s bond trader Fabrice Tourre, who calls himself Fabulous Fab, has learnt the hard way that there are no secrets when it comes to e-mail.

His most famous e-mail that is now broadcast to the whole world went like this: “More and more leverage in the system. The whole building is about to collapse anytime now … Only potential survivor, the Fabulous Fab … standing in the middle of all these complex, highly leveraged exotic trades he created without necessarily understanding all of the implications of those monstrosities!!!”

And if that is not enough, even his amorous e-mail exchange with “a gorgeous and super-smart French girl” is now a matter of public record.

For Tourre and other Goldman Sachs executives questioned by the Senate’s Permanent Subcommittee on Investigations last week, their e-mail trail going back to 2007 has provided much of the ammunition for the senators to grill them with.

Whether e-mail or SMS, the reality is that anything we put in writing is potentially a disaster waiting to happen.

If you don’t believe me, you should buy the book Great Email Disasters by Chas Newkey-Burden.
His book, published in 2007, is still selling well.

Asked by a Reuters reporter about Tourre’s e-mail indiscretions, he said, “People have always been indiscreet. We just have more power to mess up at our finger tips.”

According to the author, e-mail is convenient but highly dangerous. With an ill-considered click of the mouse, you can humiliate yourself in front of millions, lose your job or even end up in court.

Let’s get real. All of us commonly use office e-mail for private purposes. Although we are advised to keep our office and private e-mail separate, they often gel into one.

When we give out our name cards, our friends and contacts will often use our office e-mail to communicate with us, even on non-official matters.

Sometimes, we get unsolicited e-mail that may be deemed highly inappropriate from our company’s point of view but they still get through despite the various filters the IT department has put in.

I guess some will say this is an occupational hazard and part of the harsh reality of life in such an interconnected world. But we should never underestimate the power of the e-mail, and its potential of making us from a nobody to an instant celebrity.

Deputy executive editor Soo Ewe Jin was inspired to write this week’s column after watching “My Best Friend’s Wedding” on DVD where the character played by Julia Roberts wrote a fictitious e-mail to wreck her best friend’s wedding. And the Goldman Sachs proceedings too, of course.

Europe’s turn to face debt crisis

In the past, developing countries including in East Asia faced debt crises and suffered from IMF loan conditions. Today, a debt crisis has emerged in Western Europe that threatens the chances of a global recovery. 

THE global economy is slipping into a new crisis, with Greece being the epicentre and several other European countries already experiencing contagion effects.

It is quite surprising that Western Europe, considered a model of good economic governance, is now having to deal with a debt crisis.

Years and decades ago, debt crises hit Africa, Latin America and Asia as well as Russia and Eastern Europe.
The developing countries affected had always been accused of causing their own problems, with the faults variously attributed to corruption, mismanagement, bad governance and crony capitalism.

Greece is accused of fiscal irresponsibility, building up huge government debts and cooking the books to hide the extent of its deficits.

But it is increasingly difficult to ignore structural factors that contributed to the financial crises through the years.

If the lessons had been learnt from the Asian crisis that started in 1997, perhaps this European crisis would not have happened.

On the other hand, it is also vital to learn from Europe’s crisis so that Asia and other developing regions will not fall into new financial crises.

In Africa and Latin America, governments had taken too much foreign loans and crises developed when they did not have enough foreign exchange to service the debts.

In many cases, this was due to the fall in the countries’ commodity export prices, the rise in their oil import prices, increased trade deficits or economica lly unfeasible projects.

These crises exploded the myth that foreign loans to governments were safe as they could not default.
The pendulum then swung and it was thought to be safe to lend to the private sector as it would use the loans for profitable ventures.

The Asian crisis arose when too much foreign funds went to local companies.

This was made possible by financial liberalisation and deregulation. Thailand, South Korea and Indonesia relaxed the rules that had prevented locals from taking loans denominated in foreign exchange, and companies in each of these countries took foreign loans of over US$100bil (RM318bil).

The relaxation of rules also enabled foreign funds and firms to engage in currency speculation and manipulation.

The resulting collapse of the Thai baht had contagion effects on Indonesia and South Korea.

The three countries’ currencies depreciated and they faced default on their foreign loans and had to turn to the IMF.

Malaysia’s currency also depreciated sharply but it did not face a default situation because some regulations on foreign loans to local companies had been retained.

The Asian crisis exploded the myth that foreign loans to companies were safe because the private sector will make correct loan calculations and invest in profitable projects.

Now, the European crisis is exploding the myths that European countries are well governed economically, that there is no or little risk in loans to their governments, and that countries within the Eurozone are especially safe, as any nation in trouble will be helped by the others.

Many European governments have built up large debts and the loans have to be rolled over or new bonds have to be issued to service old loans and fund new budget deficits.

Greece has been struggling to obtain fresh credit to avoid a default on loans due this month.

It tried to raise new cash through the market but the interest has been priced so high due to the risks perceived that the government was unable to afford market loans.

For months, Greece has sought a loan package (at less than market rate) from Eurozone countries and the IMF but the terms and amount were still being haggled over, with Germany in particular insisting on stringent policy conditions.

Speculators have been blamed, including by some European governments, for making the situation worse by accentuating the increase in risk premium on Greek debt and the decline in the euro.

Last week, credit rating agency Standard and Poor’s downgraded Greek government debt (to junk status) as well as the debt of Portugal and Spain.

This triggered panic until moves for a final Eurozone-IMF package calmed the situation at the week’s end.
The package is now expected to be €120bil (RM508bil) to cover three years’ needs.

Even then a number of economists have concluded that eventually Greece needs a restructuring of its debts, with creditors and bond-holders taking a “haircut” or a partial repayment.

According to them, it is better for an orderly debt workout up-front now rather than a prolonged crisis and a possible messy default and unilateral restructuring later.

The fallout of a Greek default can be serious as European banks have US$189bil (RM601bil) exposure to Greek loans.

They also have claims of US$240bil (RM764bil) on Portugal and US$851bil (RM2.7tril) on Spain, according to a Financial Times article.

There are concerns that the crisis may spread to other countries through contagion.
According to OECD data, in 2010 the public debt to GDP ratios are 95% for Greece, 63% for Portugal, 42% for Spain and 38% for Ireland.

The public budget deficits are 9.8% of GDP in Greece, 7.6% in Portugal, 8.5% in Spain and 12.2% in Ireland.

Meanwhile, these countries are preparing austerity measures that are bound to cause a lot of pain.
In return for the loan package, Greece is asked to drastically cut government spending, salaries and allowances, freeze government jobs, overhaul the pension scheme and close state entities.

The angry reaction to this news in violent street demonstrations over the weekend shows how difficult it will be for Greece to agree to these terms.

When the measures are implemented, the reactions will be stronger. Asia can learn from this evolving European crisis.

It cannot be expected that governments can almost automatically roll over their debts or successfully float new bonds at reasonable interest rates.

Governments have to be disciplined in managing public finances and in limiting deficits and debts.
There also has to be the re-regulation of finance to avoid excessive leverage, speculation and unethical practices.

Global Trends by MARTIN KHOR