Sunday, March 24, 2013
Malaysia in debt II
I was reading this week's The Edge this morning ... and this article worth reading. Well, I have turned into buying Focus for past weeks, rather than The Edge but this week article sound interesting.
"Malaysia's household debt-to-GDP ratio climbed to 80.5% last year from 75.8% the year before, making it one of the five most heavily indebted countries in Asia. Such high household debt could be a major threat to the economy should it falter, say economists."
Also read : http://www.themalaysianinsider.com/malaysia/article/credit-bubble-imminent-as-malaysias-household-debt-rises
From Wiki : Household debt is defined as the amount of money that all adults in the household owe financial institutions. It includes consumer debt and mortgage loans. A significant rise in the level of this debt was a cause of the U.S. and European economic crises of 2007-2012. Several economists have argued that lowering this debt is essential to economic recovery in the U.S. and selected Eurozone countries.
CAP : Now you know why many Malaysians don't feel so well off, with this level of household debt. About half our disposal income goes to servicing debt. What are some of the factors driving the high household debt/disposal income ratio?
-High growth in consumer-driven spending
-Low interest rates encourage borrowing
-Ease credit by banking institutions due to financial liberalisation (translating into fat profits for the banks?!)
-Rising house prices especially in KL and Penang where the average house price to average income ratios are much higher
-and of course, low income/wages.
So, are we worry? We all should. With 16th years of DEFICIT budgets, our gov is bankrupting our country, and majority of Malaysians do not even know about it.
BR1M ... sigh ... it is like we ourselves in great debt, but we borrowed more money to give to others, to please them ... and gain popularity. One needs not to be an economist to understand the impacts. While many Malaysians 'happily' receiving the free money, many immigrants-turn-malaysians also queued to get the free-money, given generously by our gov ... well, with obvious reason : ELECTION.
Down-grading of Malaysia's debt rating
This is an old-clip ... but still a good reminder to ALL Malaysians. It is difficult as majority of Malaysians are ignorants.
Wake up, Malaysians.