The prime minister says he does not understand the stock market. That is not much problem for most, as it is widely agreed that no one else understands it either. The prime minister attracts attention because it is unusual to hear him utter humility. Perhaps his habitual cynical levity lurks behind the literal words. He is capable of consciously crabbing to confound a contradictiion.

Taken at face value, his statement implies that he values the average stock on the KLSE at a higher price than the market, which makes him a roaring bull, in market parlance. Such a bull buys all the way down. This is somewhat worrisome to the average Malaysian, because the prime minister is a big player. Ordinarily it is not a crime to be a big player in the market, but the prime minister is playing with the public purse, employee pension funds, and the personal savings of private citizens. It is easy to play big with another man's money.

The head of the central bank released the annual report for last year yesterday, and it attempts to paint a comforting picture of things to come. It fails. The discussion argued the possibility of managing inflation by using standard supply and demand concepts. There was no mention of the government salary increase, the toll, the petrol, the bus fare increase and the effect these have on the average consumer. The huge increase in treasury paper (RM 300 million went to over RM 7 billion) was not commented upon, nor the fact that the EPF and other domestic funds absorbed almost all of this debt.

The Federal debt service at 16% of GDP was considered low, without a mention of the amount of the combined state debts. Because inflation is officially low, the interest rates may be made low, and the interest costs of servicing the national debt are thereby less. This is unfortunate for the funds, which will receive the lower rate, as well as the public who will receive a lower dividend. The key is the officially stated low rate of inflation. Apparently the statistical department employees do not commute.

The annual report does not give the actual amount of servicing the national debt, giving it as a percentage of GDP. Many may feel this a bit slippery, since annual interest on public debt is paid from annual federal income, and on this basis the interest burden is far more alarming than to say it is "only 16% of GDP." The same acrobatic style pervades the entire document.

The new contingency plan, to offset local effects of any US economic decline, is presented with excitement and smiling exuberance. It calls for overspending the federal income into the far future. But the tax and licence fee payer, whether private or corporate, finds little to applaud. Malaysia is going deeper into debt. This in spite of the fact that interest payments on the total public debt are already a serious concern (or should be).

The annual report makes much of the liquidity to be found, referring to money lying about everywhere, crying to be borrowed and spent. Yet there is feverish activity to find foreign money. A loan of $1 billion US is sought immediately. We are told the peg is a good thing, and that it is working fine, and will be continued. So says the annual report. But the ringgit is worth what someone is willing to pay for it, not what the government says it is worth. The ringgit is legal tender only in Malaysia, and it is not allowed to be taken out of the country. It is worthless anywhere else, and it buys less and less at home.

Tourists trade for ringgits, as do those who wish to buy Malaysian goods. These are the major sources of foreign funds. Both are diminishing by the day. The central bank must find means of making up the difference. It is to be done primarily by relying on domestic demand. But there is no domestic source for foreign funds. The economic security of Malaysia thus bets on butterfly exhibits, trade fairs and raucous car races to entice enough tourists to come and trade their francs and pounds for the national currency at the pegged rate.

The administration headed by the prime minister holds the reins of most corporate enterprises in the country, one way or another. Many millions of shares are in held in hock, and their value must stay high to avoid a margin call. The market is rife with manipulation. This leads to the present situation, which the prime minister is referring to when he says, "ours will always be thought of as a Mickey Mouse stock market."

The government-controlled companies are important components in the national economy. They participate much as consumers do, buying and selling goods. They are out to make a profit, competing with all other companies, though not enjoying the benefits of government sponsorship. It is not a fair competition, as there is no penalty for mismanagement and fraud in government aligned enterprises. The honest businessman has little chance in this unfair market, dominated as it is by the prime minister's party. Playgoers know that when the set falls, the illusion is destroyed. The set has fallen on this palsied play. The curtain closes in shame.

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