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The Global Economy in Turbulent Times



"The depth of analysis and breath of coverage can only come from someone with a sound understanding of the issues involved, and written in a style that is easy to read and can be understood by the non-specialist. Anybody with even the slightest interest in current economic matters and regional financial affairs should own and read this book. You will be richly rewarded. You will not find another book quite like it."
–Dr. Nazrin Shah, Sultan of Perak, Malaysia, and Royal Patron, International Islamic Financial Centre

"I wish the leaders of Europe and America as much as the leaders of Malaysia would read what he has to say. I think many of us are in denial, but reading the essays in this book might help us to acknowledge the truth. I read textbooks but I prefer to do my own thinking. This process is helped by reading some of the writings of See-Yan. I would recommend this book be read by people entrusted with guiding and leading their societies and nations."
–Tun Dr. Mahathir Mohamad, Prime Minister of Malaysia, 1981–2003

"In all of these essays, seemingly complex economic issues are explained without technical jargon in ways that any educated person can follow even if they have no background in economics. Most economists have trouble being both rigorous and clear, but Dr. Lin is a notable exception. This book can be read from cover to cover, but for many readers it will serve two roles. It is an excellent reference book. It is also a book for use as a very good university course on global economic issues."
–Dwight H. Perkins, Harold Hitchings Burbank Professor of Political Economy, Emeritus, Harvard University, and Chairman, International Academic Advisory Council, Jeffrey Cheah Institute on Southeast Asia, Sunway University

"For over fifty years, through his wide global network of high-level policy analysts and his deep immersion in core domestic policy discussions, Prof. Lin has helped to brainstorm and address every major macroeconomic crisis. In each case, he has lent his powerful analytical mind and sense of culture, history, and politics to help shape public policy responses to ameliorate the situation. It is my great pleasure and honor to help disseminate Lin See-Yan's great wisdom for the wide world."
–Jeffrey D. Sachs, Quetelet Professor of Sustainable Development, Professor of Health Policy and Management, and Director, Earth Institute, Columbia University, and Special Adviser to UN Secretary-General Ban Ki-moon

LIN SEE-YAN is a Harvard-educated economist and a British Chartered Scientist. Currently, he is Pro-Chancellor and Research Professor at Sunway University. He was advisor to all Prime Ministers and Ministers of Finance in Malaysia since its independence. Dr. Lin teaches, writes, publishes, and consults on strategic and financial issues, including writing a fortnightly column What Are We To Do in The Star, which is widely circulated in Malaysia.

Royal Prelude xlvii

Foreword xlix

Preface li

Introduction liii

About the Book lv

Acknowledgments lix


CHAPTER 1 TW3 2008: The Year Free Markets Ran Amok 3

CHAPTER 2 2009: “Oxpicious” Year Ahead 9

CHAPTER 3 Beware of PME in a Jobless 2009 Recovery 17

CHAPTER 4 G-20 Summit, Pittsburgh 2009: Has “It Worked”? 23

CHAPTER 5 TW3 2009: Growing Again, but Hold on Tight 29

CHAPTER 6 Summer 2010: In for a Bumpy Ride, Even a Double-Dip? 35

CHAPTER 7 G-20 Summit, Toronto 2010: Reflects a Fragile Unity 41

CHAPTER 8 IMF Meet, Fall 2010: A Cop-Out 47

CHAPTER 9 G-20 Summit, Seoul 2010: Much Ado about Nothing 53

CHAPTER 10 TW3 2010: The World Trichotomized 59

CHAPTER 11 Prospects 2011: As the World Turns 65

CHAPTER 12 A Check-up at Mid-Year, 2011 71

CHAPTER 13 Gloomy Outlook Takes Its Toll, 2011-2012 77

CHAPTER 14 G-20 Summit, Cannes 2011; APEC, Honolulu 2011: Without Gusto! 83

CHAPTER 15 TW3 2011: Annus Horribilis 89

CHAPTER 16 G-20 Summit, Los Cabos 2012 GJAP: More of the Same 95

CHAPTER 17 APEC, Vladivostok 2012: A New Perspective 101

CHAPTER 18 TW3 2012: A Tough Year with a Bleak Outlook 107

CHAPTER 19 2013: Breadth of Global Slowdown Disconcerting 113

CHAPTER 20 TW3 2013: Tension and Risks; a Peek at 2014 119

CHAPTER 21 Spring 2014 Stock Take: Complex Risks Ahead 127


CHAPTER 22 The Paradox of Thrift 135

CHAPTER 23 Deflation Is Not an Option 141

CHAPTER 24 Reality Check on Economic Models 147

CHAPTER 25 Commodity and Asset Prices Are Up; Can Inflation Be Far Behind? 151

CHAPTER 26 A New Hazard: Double-Dip Deflation 157

CHAPTER 27 The “New Normal” 163

CHAPTER 28 Muddling Through the Inflation 169

CHAPTER 29 It’s a Dangerous World out There 175

CHAPTER 30 “Risk-Off” Episodes 181

CHAPTER 31 Now’s Not the Time for Austerity 187

CHAPTER 32 The World Economy: Growing Pains and Bubbly Worries 193

CHAPTER 33 What’s Up Is Down 199


CHAPTER 34 Jackson Hole “Gunfi ght” Shoots Blanks 207

CHAPTER 35 The United States Is No Longer AAA 213

CHAPTER 36 “Occupy Wall Street” Goes Global 219

CHAPTER 37 Lessons from Marx to Market 225

CHAPTER 38 Sachs and Krugman on the Global Crisis 231

CHAPTER 39 Life after Keynes with the Double-Dip 237

CHAPTER 40 Growth Dims after the “Cliff” 243

CHAPTER 41 An Inconvenient Truth: QE Withdrawal Syndrome 249

CHAPTER 42 An Unnecessary Disaster Spawns Market Fears 255

CHAPTER 43 US Growth Deficit: Too Loose, Too Long 261


CHAPTER 44 Dark Clouds over Europe and the United States 269

CHAPTER 45 ECB and Fed Clear Way to Act 275

CHAPTER 46 Eurozone Growth Can’t Move beyond First Gear but Needs to Keep Deflation at Bay 281

CHAPTER 47 PIIGS Can’t Fly: The Trouble with Greece 287

CHAPTER 48 Greece Is Bankrupt 293

CHAPTER 49 Greek Bailout Mark II: It’s a Default 299

CHAPTER 50 Greece and Eurozone: Austerity Fatigue 305

CHAPTER 51 Greece: More Aid Needed to Save the Austerity-Fatigued 311

CHAPTER 52 New Euro Deal: Not the Whole Bazooka 317

CHAPTER 53 European Union: Favoring Growth Against More Austerity 323

CHAPTER 54 European Union: A Summer of Discontent 329

CHAPTER 55 European Union: Draghi’s Bumblebee 335

CHAPTER 56 Cyprus’s Bailout Turns Bail-In 341


CHAPTER 57 Japan in Deep Hibernation 349

CHAPTER 58 3-11: The Tohoku Disasters One Year On 355

CHAPTER 59 Japan Picks Up the Pieces 361

CHAPTER 60 Abenomics: Japan Comes Alive Again 367

CHAPTER 61 Abenomics Hitting Speed Bumps 373


CHAPTER 62 So, the Gold Bug Still Bugs You 379

CHAPTER 63 Man’s Addiction to Gold 385

CHAPTER 64 In Search of Gold at Bretton Woods: Lust for Gold Not Paying Off 391

CHAPTER 65 What’s Wrong with the International Monetary System? 399

CHAPTER 66 US Dollar: Cracking at the Seams 405

CHAPTER 67 The Dollar Quagmire 411

CHAPTER 68 The “Trilemma” of Capital Controls 417

CHAPTER 69 Burgernomics and the Ringgit 423

CHAPTER 70 The Yuan Way to a New Monetary Order 429

CHAPTER 71 Why Tokyo Failed to Be Top-Tier IFC 435

CHAPTER 72 At Risk: Beggar-Thy-Neighbor 441

CHAPTER 73 Currency Wars at a Time of Defi cient Demand 447

CHAPTER 74 Tension over Exchange Rates 453

CHAPTER 75 RMB: What’s a Budding Currency to Do? 459

CHAPTER 76 The Kiss of Debt 465

CHAPTER 77 This Obsession with Debt 471

CHAPTER 78 The Tobin Tax Revisited 477

CHAPTER 79 Dubai: Or Is It Bye-Bye? 483

CHAPTER 80 Whatever Volcker Wants, Volcker Gets? 489

CHAPTER 81 “Too-Big-to-Fail” and the Volcker Rule Faces Fresh Challenges 495

CHAPTER 82 LIBOR Scandal Fuss 501

CHAPTER 83 Wall Street Stock Market Rigged: HFT “Cheetahs” Only Take 13,000ths of a Second to Turn a Profit 511

CHAPTER 84 Shadow Banking: The Global Bogeyman 517


CHAPTER 85 Blue Ocean That’s Also Green 523

CHAPTER 86 The Crimson Goes Green 527

CHAPTER 87 The Road to Copenhagen 533

CHAPTER 88 RIO+20: What a Huge Disappointment 539


CHAPTER 89 9.6 Billion 547

CHAPTER 90 The Seven]Billionth Baby Is Born 553

CHAPTER 91 The Ominous Demographic Dilemma 559

CHAPTER 92 The Quality of Life 565

CHAPTER 93 The Emerging Bourgeoisie 571

CHAPTER 94 Rising Income Inequality and the Piketty Blockbuster 577

CHAPTER 95 Has Undergraduate Education Lost Its Way? 581

CHAPTER 96 The MBA: Is It Still Relevant? 587

CHAPTER 97 375 Years and Still Number One 595

CHAPTER 98 Onward the Harvard Connection 601

CHAPTER 99 The Future of University Education: What It Takes to Be Educated 609

CHAPTER 100 Schumpeternomics: Gotta Keep on Learning 615


CHAPTER 101 Getting “Cangkul]Ready” 621

CHAPTER 102 Now the Real Pain Begins 625

CHAPTER 103 Mahathir’s Challenge 631

CHAPTER 104 Stimulating Times 637

CHAPTER 105 Price Fixing, Market Sharing, and Collusion Are Illegal 643

CHAPTER 106 Najib’s New Way Forward 649

CHAPTER 107 We Still Don’t Get It 653

CHAPTER 108 Creativity: The Key to NEM’s Success 659

CHAPTER 109 The Mystique of National Transformation 665

CHAPTER 110 Toward Quality Undergraduate Education 673

CHAPTER 111 Innovation: Catalyst for Recovery 679

CHAPTER 112 On Productivity and Talent Management 685

CHAPTER 113 Finance for Innovative Ventures: Broken Dreams? 691

CHAPTER 114 Venture Capital Initiatives to Boost Entrepreneurship 697


CHAPTER 115 Export]Led Growth Model: Quo Vadis? 705

CHAPTER 116 “Go East, Young Man” 711

CHAPTER 117 Asia Feels the Heat 717

CHAPTER 118 QE3 Exit and Asia’s Trilemma 723

CHAPTER 119 Focus of Concern: Emerging Asia at Risk 729

CHAPTER 120 ASEAN Stimulus 735

CHAPTER 121 ASEAN+3 Stimuli 741

CHAPTER 122 AEC Is on the Way, but It’s No Big Deal 747

CHAPTER 123 South Korea Emerges More Competitive 755

CHAPTER 124 The Philippines: Its Turn Is Next 761

CHAPTER 125 Indonesia Losing Its Footing? 767

CHAPTER 126 Indonesia and India: Under New Management 773

CHAPTER 127 Vietnam Wakes Up: Ding Dong Dung 779

CHAPTER 128 Thailand on the Rebound 785

CHAPTER 129 Myanmar: Not the Burma I Used to Know 791

CHAPTER 130 Myanmar Spring: “Look, Listen, Learn, and Leave” 797

CHAPTER 131 The BRICS Are Coming . . . 805

CHAPTER 132 BRICS Can’t Run as a Herd 811

CHAPTER 133 Acronym Anxiety: BRICS Are Stumbling 817

CHAPTER 134 China: Realities about Its BOP Surpluses 823

CHAPTER 135 China: RMB Flexibility Not Enough 829

CHAPTER 136 China: Much Ado about Nothing 835

CHAPTER 137 The “China Dream” 841

CHAPTER 138 China: Economic Slowdown: A Cause for Concern? 847

CHAPTER 139 China: The Third Plenum Reforms Are Well Received, but the New Deal Flashes Danger Signals 853

CHAPTER 140 China: Multiple Policy Dilemmas 859

CHAPTER 141 China: Rebalancing Growth with Reform and Moving Up to the Next Level 867

CHAPTER 142 India: The Outlook Dims 873

CHAPTER 143 “A Passage to India”: The Outlook Remains Dire 879


CHAPTER 144 On Corporate Governance and Doing It Right 887

CHAPTER 145 The CG Blueprint 2011: “Let a Hundred Flowers Bloom” 893

CHAPTER 146 Creative Destruction: “Kodak Moment” No More 899

CHAPTER 147 The F&N Saga 905

CHAPTER 148 On Global Gaming, Aussie$, the SGX-ASX Merger 913

CHAPTER 149 In Search of Growth 921

CHAPTER 150 The Goat Straggles into 2015 amid Rising Risks 931

CHAPTER 151 2015: A Dismal World Where Oil and Currencies Are Causing Havoc 937

Notes 941

About the Author 943

Index 945