Tuesday, 13 December 2011 06:59
PUTRAJAYA -- Former Prime Minister Dr Mahathir Mohamad slammed Europe for initiating a bailout fund to help member economies struggling with their debt crisis, saying European countries should not live beyond their means.
He charged that Europe was getting a dose of its own medicine and said that there was no need for Malaysia to participate in the Europe bailout fund as they did little to help Malaysia during the 1997/98 Asian financial crisis.
He said it was the unscrupulous western hedge funds which attacked the Malaysian Ringgit and other Asian currencies, precipitating the financial meltdown from which regional economies took a long time to recover from.
And when Malaysia helped its companies recover from the crisis without going to the International Monetary Fund and thereby maintaining its financial independence, they criticised the government for adopting unorthodox policies to prevent a financial disaster.
"No, why should we? If I'm in the government, I wouldn't. I don't think Malaysia should contribute anything, you see they tried to bankrupt us before and they undermined our currency, he said when asked whether Malaysia should contribute to the bailout fund after European leaders agreed to tighter budget rules and an expanded bailout fund at the European Union Summit last week.
"Now, they are (being served) the same dose of medicine, so let them solve it. Actually, their wealth is not true wealth," the former prime minister, who was credited for saving Malaysia from a financial disaster, said in an interview with Bernama and Bloomberg on Monday.
Dr Mahathir said both the United States and Europe were the world's largest home appliances and car manufacturers but later focused on the financial industry after Eastern countries like China, Japan, South Korea and Taiwan started to produce similar products.
"The financial market is not a real business because it does not create jobs and there are no spinoffs. They make billions of dollars just by transferring numbers in the books of banks.
"When they start leveraging, eventually the whole system collapses due to gambling, speculations and manipulative activities. Now they are poor people, but they don't admit that and want to live in their own style.
"When their governments want to have an austerity programme, they protest against it through demonstrations, which make matters worse," Dr Mahathir said.
Many western economists asked the Malaysian government not to bail out companies, but asked the government to have a surplus budget and raise interest rates to curtail spending but the government decided not to follow them.
Contrary to calls for tighter spending, Malaysia adopted unorthodox measures by loosening spending and lowering interest rates to spur business activities which helped the country to gradually recover from the financial crisis.
The government also imposed capital controls including pegging the ringgit against the US dollar and banned ringgit trading outside the country in a bid to stop speculations against the Malaysian ringgit.
Speculative attacks saw the ringgit diving from RM2.42 against the US dollar in July 1997 to as low as RM5.20 about a year later, which led Dr Mahathir to peg the ringgit against the greenback to RM3.80 under the capital controls.
"We did go against them. Now they are doing all the things that we did, but on a bigger scale, with Germany bailing out Greece with US$300 billion.
"We only bailed out companies during the financial crisis in the range of RM200-RM300 million only," he said.
Asked on ways to solve Europe's problems, Dr Mahathir said they should not live beyond their means.
"If you are poor, you live like poor people, accept lower pay, the standard of living must be lower and don't enjoy life too much.
"But the problem is, now they want to live like they are rich," added Dr Mahathir, who was prime minister for 22 years.
(Bernama)
Former Malaysian PM Mahathir Mohamad slammed Europe Debt Plan
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