Thursday, September 18, 2008

Bullshit By Any Other Name …

If it were on television, then the moving lips tell; elsewhere in the print media, a sophisticated sounding explanation from a government official is definitely it -- bullshit.

That’s the nicest thing I can say about the Domestic Trade and Consumer Affairs Minister Shahrir Abdul Samad’s statement on the government’s inability to lower the retail price of petrol.

On fuel prices, he said although the world crude oil price dropped to US$92 a barrel today, the American currency was higher against the Malaysian ringgit (USD1 =RM3.50) compared to RM3.20 early this month.

"Besides the drop in the crude oil price, fluctuation in the American currency against the Malaysian currency also affects our decision in determining the new fuel prices," he said.

Contrary to Shahril’s bullshit, the ‘horrible’ truth about the foreign exchange value of a country’s currency, given a ‘reasonable’ economy like Malaysia, is that – within a narrow band, the value is simply a matter of government policy.

The resulting currency regime is called a ‘dirty float’ – one that the Bank Negara has been practising since 1967. Tun Tan Siew Sin started it, and Nor Mohamad Yaakob nearly killed it circa 1992.

I believe in the case of the ringgit, the exchange rate relative to the US Dollar is easily defensible at USD1 = RM3.25, if the government (through the Bank Negara) so desires. Nevertheless, as with all the other blunders and fiascos of this regime, I don’t think Pak Lah’s punk advisors have a clue as to what they are looking at.

Hence, we are all stuck with a petrol price which we can barely afford on a salaryman's income.

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