Mathir Mohamad, former prime minister of Malaysia, discusses the mishandling of the global financial crisis and proposes radical measures for G-20 leaders to address it when they meet in Seoul, South Korea, next week, Nov. 11 and 12.
Kuala Lumpur, Malaysia
The G-20 group of countries that will be meeting in Seoul, South Korea represent only themselves. How they were selected and what qualified them is a mystery. But what they will be deciding will no doubt affect the entire world. One can only hope the effect will be good for the poor economies as much as it must be for the rich economies.
As it has been for the past few meetings, the current financial super-crisis will be on the agenda. It so far has defied solutions by the G-20 and by others. Will the meeting in Seoul be any different?
Malaysians are not in the same class as those people in the International Monetary Fund (IMF), the World Bank, the world-renowned financial institutions, and the Wall Street people. But Malaysia has had the bad taste of a currency crisis precipitated by the speculative traders. We managed to overcome the crisis by ignoring convention and doing the unthinkable.
Might it be possible that the present crisis, too, needs to be dealt with by doing the unthinkable? Of course, the causes of the present crisis are not exactly the same as the East Asian financial crisis of 1997-1998. And the scale is also different. Saddam Hussein, if he were alive, would call the present crisis “the mother of all crises.”
But still there is something common between the East Asian financial crisis and the present crisis. Both are man-made. Both are the result of abuses of the prevailing systems by greedy people.
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Taken from that angle, the response to the current crisis may well lie in adapting the solutions to East Asia’s earlier crisis, perhaps with particular reference to the Malaysian way.
What Malaysia did was reject the belief that the crisis was due to bad financial management, contagion, and loss of confidence in our institutions. Instead, Malaysia insisted that the crisis was due to deliberate manipulation of exchange rates by currency traders.
To solve the present crisis, the first thing to do is to acknowledge that it is the result of criminal abuses by certain market players. So much has been lost and no amount of currency printing will bring back the wealth.
The rich must accept that they will become poorer. Just as they used to readily advise countries in financial trouble that when companies lose money, the best thing to do is shut them down, so must they accept that all those institutions which lost money must be shut down.