The Worst is Not Over Yet but We Can Survive, only if …

Wall Street was behaving as if the worst was over which saw investors snapping stocks in anticipation of a reverse to the bearish market. Everybody was trying to prove that they managed to buy at the lowest. It sure feels good if your prediction was right. After all how many can beat Warren Buffett in the game of “I bought at the lowest”, never mind that the Oracle couldn’t do so himself? But a surprisingly weak retail sales report punctured investors' optimism about the economy causing Dow Jones to lose almost 140-points. Financial stocks took the beating after Goldman Sachs Group Inc. announced strong profits but said it would raise $5 billion (huh?) to repay government bailout money.

The unexpected 1.1 slump in retail sales (the biggest fall in three months) in March was far worse than the increase of 0.3 percent that analysts polled by Thomson Reuters. So, if you think the worst is over think again because we’re not out of the woods yet. With Americans still losing jobs by the thousands, a major fear is that people will cut back even further on their spending and that could plunge the powerful economy into a sharper tailspin. Yahoo Inc. is gearing up for its third round of mass layoffs in 14 months. Intel Corp.’s strong first-quarter earnings result ($647 million) that easily beats Thomson Reuters estimate of 3 cents per share plus its proclamation that slumping personal computer sales have "bottomed out" failed to excite investors. Reason – Intel wouldn’t give detailed revenue forecast because it's still “too hard” to accurately predict results in this environment.

In the current sketchy environment countries that rely solely on exports especially to countries such as U.S. and Europe would find little space to breathe. I’ve mentioned before that despite the global economic crisis the hidden blessing in disguise was the opportunity for these countries to relook at their own economic framework to determine if it could sustain on its own should another crisis hits. This is also the best time to test if leader of a country could mobilize its economy experts to architect a new solution to drive the country out from the storm. It’s time to relook at the old economic model of relying on labor-intensive industries and perhaps move up the value-chain *yawn*. Of course countries such as Thailand and Malaysia which are having internal political problems may justify that their own political survival are at stake so the economy issue can go fly kite.

It’s ironic that some leaders couldn’t calm down and look at a bigger picture. Instead of poking fun at certain ethnic *there we go again* for being “ungrateful” despite taken the “instant noodle” but never vote them in the recent by-election, he may want to relook at the education system that is continuous producing graduates that are unemployable. Quality human resource is the greatest asset if there’s political will to move the country up the value-chain especially in the research & development. At this moment we’re still wondering and guessing if the new PM Najib is ready and capable of commanding the ship, which has been circling in the sea for the last 5 years, to the next and subsequent destinations. It seems he’s busy taking the commands from his mentor Mahathir on how to revive the old plans or projects such as the “Crook-Bridge” abandoned by Badawi.

There’s nothing wrong to be sentimental and vengeful in reviving the controversial S-shape crook-bridge because such project would generate employment but the perception that the project costs would multiply many times to satisfy the cronies is simply worrying. Ability to create domestic demand to spur the economy is one thing but to be wasteful on crook projects and other white elephant projects is another thing. People are still hoping that PM Najib could get over with his disappointment over the Pattaya incident *grin* and be a leader who could drive the country to a higher level, not into the sea of disastrous. Sure, Mahathir is still needed as long as he’s not senile but only for useful advises (to the country and people) and not individual ambition such as the resurrection of a dictator via “Presidential Councils”. Najib has only himself to be blamed if he can’t control and govern the country. And maybe he needs to tell his deputy to not make fun of himself by blaming the press for “twisting” the facts. People have awaken and not stupid anymore, not with the internet and blogs pushing information faster than the traditional government-controlled media.