THE FINANCIAL CRISIS OF 1997 - 1998

By Nor Mohamed Yakcop

A moment comes, which rarely comes in a lifetime, when a particular event redefines a person's life and changes the course permanently. For me, the meeting with Dr. Mahathir Mohamad in Buenos Aires (Argentina) on the evening of October 3, 1997 was such an event. It enabled me to devote the next 6 years of my life working for Dr. Mahathir Mohamad, meeting him almost daily. In the process, it enabled me to see, at very close range, the abilities of this great man.

The combination of many noble qualities in one person is rare, and it is this unique combination that has enabled Dr. Mahathir Mohamad to transform Malaysia from an otherwise typical third world country into a thriving and vibrant nation, well on the way to become a developed nation. It is also this combination of qualities that enabled Dr. Mahathir Mohamad to save Malaysia from becoming another IMF nation during the financial crisis of 1997 - 1998.

I am often asked about my involvement in the recovery plan implemented on September 1, 1998. It began on September 29, 1997, when I received a telephone call from the office of Dr Mahathir Mohamad informing me that the Prime Minister wanted to see me. The PM was in Cuba at that time, and I asked (in jest) if I was to meet the Prime Minister in Cuba!

I was told (not in jest) that he will be arriving in Buenos Aires on October 3, 1997 and I was to make sure I was in Buenos Aires at least a day before he arrived. I packed my bags and left for Buenos Aires, and arrived in Buenos Aires on October 2.

The PM arrived the following day at 5 pm and we met immediately at his suite. He informed me that he had asked many people to explain to him what was causing the financial crisis but no one was able to give him a satisfactory reply. He asked me whether I could explain to him what exactly was happening.

I asked him how much time he had, and he said two hours. I explained to him how the forex market works, about short positions and long positions, about hedging and how currencies are borrowed and sold, the difference between "bid" and "offer" and how funds can be transferred from one country to another at the click of a button. I also explained how the equity market works and the relationship between the forex market and the equity market. Dr. Mahathir hardly said anything, asked one or two questions, and listened intently.

After two hours, he had to end the meeting to get ready to go for an official dinner. He asked me about my plans for the night and I said I had been invited for the same dinner. Dr. Mahathir said to me: You go back to your room and write down all that you have been telling me for the last two hours, and see me at 7 am tomorrow. I went back to my room, skipped dinner, and wrote it all down, finishing at about 6 am.

I saw him the next morning at 7 am and gave him the report. He asked me to take a rest and come back again at 2 pm. When I returned, he told me that he had read the report and that he now understands what was happening in the financial markets. We started discussing various methods of overcoming the crisis, and our discussions continued when we returned to Malaysia. I met him almost daily for discussion, sometimes at his house and sometimes at his office. We tried a few mechanisms to overcome the crisis; some of which worked initially, but the hedge funds were so strong that it was difficult to proceed successfully with these mechanisms.

In early 1998, Dr. Mahathir Mohamad asked me to explore the idea of imposing an exchange control regime to overcome the crisis. I remember preparing voluminous notes on this subject. Dr. Mahathir went through the notes carefully, and kept asking for more and more details. We went through many rounds of discussion, until he was finally convinced both with the concept as well as the proposed mechanism. The rest, I guess, is history.

Dr. Mahathir also asked me to prepare a paper on how to put an end to Malaysian shares traded in CLOB (Central Limit Order Book) in Singapore. Dr. Mahathir was of the view that an important reason for the falling stock market was the short-selling of Malaysian stocks in CLOB. I prepared the report and Dr. Mahathir understood, for the first time, how exactly CLOB operates. The report, which was also implemented on September 1, 1998, put to an end the trading of Malaysian shares in CLOB.

I should add that the exchange control measures were crafted in such a way as to minimize the control aspects and maximize the outcome. The Prime Minister went through the proposed mechanism many times to make sure that the control elements were as few as possible, but adequate enough to ensure a positive outcome. There were no bureaucratic elements in these measures, such as requiring importers to obtain Bank Negara's permission to import. The Ringgit was also pegged at a level where it was not overvalued. In almost every other country, which imposes exchange control measures and pegs its currency, there would, almost by definition, be numerous bureaucratic controls, and the currency would also be pegged at an overvalued rate.

It is often assumed that the system of exchange control (including fixed exchange rate) that we implemented on September 1, 1998 saved the country. The measures of September 1, 1998 were undoubtedly a necessary condition, but it was not a sufficient condition to overcome the crisis. Malaysia was saved, not by exchange control measures per se, but by Dr. Mahathir Mohamad.

Let me explain. Any other developing country, facing a similar crisis, if it had introduced the measures that we introduced in September 1998, the measures would probably have failed. The fact that in Malaysia these measures succeeded is due to the ability and character of Dr. Mahathir Mohamad. The economy and the financial system, under Dr. Mahathir's leadership, was in a very healthy state–healthy enough for the exchange control measures to be implemented without negative consequences. Moreover, the Prime Minister's hands-on management style enabled quick and timely decisions to be made, which was vital under the new exchange control regime.

Dr. Mahathir, as Prime Minister, had ensured that the Malaysian economy was fundamentally strong. Ringgit was strong and stable. On the back of the currency stability (at RM2.50 against the US dollar) Malaysia was doing very well. At the end of 1996, real Gross Domestic Product (GDP) grew at almost 8.5 per cent and the growth was expected to continue for many more years. The government was enjoying a fiscal surplus. The external debt was low, at 40 per cent of the Gross National Product (GNP). The current account of the balance of payments had narrowed from a deficit of 10 per cent to 5 per cent of GNP, and was expected to improve further. Inflation was at its lowest at 2.1 percent. We had steady growth of over 8 per cent for a major part of that period. And this fundamental strength of Malaysia was a critical factor that enabled the exchange control measures to succeed.

For a period of more than a year after the measures of September 1, 1998 were implemented, the Prime Minister met with a small group of us everyday - 6 days a week - for at least 2 hours to go through various economic data, including data on loan growth, exports, imports, property overhang etc. This enabled the Prime Minister to take quick actions, whenever required. I remember one morning when we were going through the property figures; he looked at me and directed that I should organize a property fair to clear the overhang of properties. I did, and property worth more than RM 3 billion was sold. Even after the crisis was over, Dr. Mahathir continued to meet with the group regularly, though no longer on a daily basis. And Dr. Mahathir continued to go through all the economic data with a sharp pencil.

No other Prime Minister in the world, either in developed or developing countries, employs such a hands-on approach in managing the economy. We can see, therefore, that it was not the exchange control measures per se that saved the country but the man — Dr. Mahathir Mohamad — himself.

The period 1997 - 1998 was, to paraphrase Charles Dickens, the worst of times, but it was also the best of times. The worst conditions brought out the best in Dr. Mahathir Mohamad. There is a saying that a good leader is like good tea - you only know the true quality when he is in hot water!

Throughout the crisis, the Prime Minister was focused on resolving the crisis. Day and night, he thought of nothing else but the crisis. He read all he could on finance; he kept asking me to prepare notes on various technical issues. Sometimes he was sick with bad flu and cough, but he did not take time off to rest. He was convinced that he had to understand the issues before he could work out the solutions. His native intelligence and ability to focus on core issues were there throughout the crisis. He did not show any sign of fear even at the worst of time, only concern at the fast deteriorating state of the economy. He was, at all times, confidant that he would prevail in the end.

I would like to add two additional points related to the financial crisis. The first is that, in implementing the measures of September 1, 1998, Dr. Mahathir not only saved Malaysia but the neighbouring countries as well. Let me explain. When Malaysia imposed its exchange control measures on September 1, 1998, the currency speculators realised that the other affected countries (Thailand, Indonesia and South Korea) could also impose similar controls, and they, therefore, stopped their activities in its track. The speculators backed off. They bought back the currencies that they had sold. This is resulted in the regional currencies appreciating. Moreover, the International Monetary Fund (IMF) was not happy with what Malaysia had done, particularly since, after implementing the measures, we did exactly the opposite of what the IMF wanted us to do, i.e. we lowered our interest rates and injected liquidity into the system. The IMF, therefore, started relaxing conditions in other countries and allowed them to lower their interest rates and allowed them to inject liquidity to stimulate their economies so that Malaysia would not outperform the IMF countries. Therefore, it is no exaggeration to say that Dr. Mahathir Mohamad not only saved Malaysia, but the other affected countries in the region as well - Thailand, Indonesia and South Korea.

My second point is regarding what would have happened if the exchange control measures were not implemented. If the measures were not implemented, many of corporations in Malaysia would have gone under, due to the high interest rates. When the corporations fall like dominos, banks would have faced severe liquidity and solvency problems due to the ballooning NPLs. The problems of the banks would have resulted in a credit squeeze, which would have led to another round of corporate failures. The Government's revenue would have fallen drastically as fewer firms would be paying corporate taxes, thereby reducing the Government's ability to stimulate the economy through fiscal policy measures. As a result of the problems faced by corporations and banks, unemployment would have increased substantially, leading to a second round of problems. This is the classic vicious cycle, which could have, in the end, destroyed the social and political stability of the country. This was a scenario that was waiting to happen. It did not happen because of the decisiveness and guts of Dr. Mahathir Mohamad, who decided to take the path less traveled.

We owe Dr. Mahathir much gratitude for what he has done for Malaysia over the last 22 years. Solving the financial crisis of 1997 - 1998 was just one, albeit perhaps the most important, of Dr. Mahathir Mohamad's many contributions to the nation.

On a personal note, over the last 6 years, I have come to admire this great man for his abilities, his high moral values and, most of all, for his sincerity. Certainly, a man like Dr. Mahathir Mohamad is not born everyday.

(23rd. October, 2003)

SPEECH BY
TUN DR MAHATHIR BIN MOHAMAD
AT THE NATIONAL SCHOOL OF DEVELOPMENT,
BEIJING UNIVERSITY, CHINA
ON 29 APRIL 2009
—————

“The Global Financial Crisis of the 21st Century -Lessons for Asia”


1. Firstly I would like to thank the National School of Development of Beijing University for this invitation to speak on the subject of the Global Financial Crisis of the 21st Century – Lessons for Asia.

2. I must admit that I am not trained in finance and not even in economics. I am a doctor of medicine. My little knowledge about finance and economy came through my serving as the Prime Minister of Malaysia during which time I had to handle many financial crisis, the worst of which was the 1997-98 currency crisis. To handle that crisis I had to ask a lot of economists and financial people a lot of questions and of course I had to read a lot on the subjects. However not being from any economic school or financial institution, I was not constrained by the theories that are taught in such places. I could therefore strike out on my own and also do unorthodox things. Unfortunately I am not too familiar with the technical words which those learned in the subject use and I hope you will recognise the words I use instead.

3. I am afraid my views on the present crisis are also unorthodox as they are the results of my untutored mind analysing what is happening.

4. We talk of the Global Financial Crisis of the 21st Century. But of course just as the 21st Century is a continuation of the 20th Century and before, the financial crisis is a continuation of the crisis we saw in the 20th Century and those before that. In fact the crisis originated from the systems formulated in the 17th and 18th centuries, almost exclusively by the Europeans.

5. The present crisis had its beginnings in the faulty systems devised for banking and finance in the 1700s. When it became impractical to use coins for payments due to their bulk and weight, paper money was introduced. Paper money has no intrinsic value. At first it was backed by precious metal like gold. Then Governments decided to go off gold. The paper money then became fiat money whose value was supposed to be guaranteed by Governments. But after the market was allowed to determine the value of money, the Government could no longer guarantee the value.

6. Unlike gold there is nothing to limit the issue of paper money. It was assumed that Governments through the Central Banks would exercise control over the printing of paper money.

7. But in America and in Britain until recently the central banks were privately owned. To compound the risk of too much currency being issued banks were actually allowed to create money, supposedly up to 10 times what they have on deposit and capital.

8. What this means is that banks can lend more money than they have. Imagine a business in which the companies can sell more goods than they have. There would be chaos. It would not be business at all. The companies cannot deliver what they have sold. The customers would feel cheated. But banks can lend more than what they have because they can create the money out of nothing. Apart from paper and ink there would be no raw materials needed.

9. Besides cheques were invented to represent money. Any amount of value can be written on the cheques and the banks can lend or accept the amount as written on the cheques. If someone borrows 10 million dollars it would really be impossible for the borrower to carry away 10 million dollars in paper money. They use cheques for this amount. Of course when dealing with a hundred million, a billion, or a trillion dollars, only cheques can represent this amount. No cash would be involved. When billions of dollars are given in bailouts no cash are involved. No money needs to be printed.

10. Although banks may lend 10 times more than the money they have, what is to prevent them from lending much more than this. And so the big American banks began to lend far more than 10 times. Very often they disregarded the ability of the borrowers to pay so that they could continue lending. For the banks their loans were regarded as assets in their books. The more money they lend, the bigger is their assets.

11. This is what led to the sub-prime problems. As the credit worthiness of their borrowers is not prime, the non-performing loans in the bank books started to balloon.

12. But to take care of this the banks decided to sell loans for housing to the insurance companies and the secondary mortgage companies like Fannie Mae (Federal National Mortgage Association) and Freddie Mac (the Federal Home Mortgage Corporation).

13. Originally set up and owned by the United States Government, Fannie Mae and Freddie Mac are now privately owned but still enjoys Government support and privileges. They have access to cheap funds with which to finance their purchase of the mortgages undertaken by banks.

14. Their operations were not overseen by Government agencies and very quickly their purchases of the mortgages ran into billions of dollars.

15. When the housing loans by banks went bad, not only the banks and the insurance companies but Fannie Mae and Freddie Mac also could not recover the loans they had given to the banks.

16. Thus the collapse of the sub-prime loans pulled down not just the banks but the insurance companies like AIG and the mortgage companies like Fannie Mae and Freddie Mac.

17. But the banks were not lending just for housing, they were also financing hedge funds and currency traders. These funds were allowed to borrow as much as 30 times the money invested with them. The banks loaned them this money out of the money they created not out of the cash they held.

18. The assumption was that if for a million dollars invested in the funds, they can actually invest 30 million dollars, the return on 30 million would be so big that the million dollar investor would get much more than he would expect if he were to go into the market to buy the one million shares himself.

19. The fund managers would of course take their cut after paying the interest on the bank loans. Again their cut on 30 times the invested money would be very considerable.

20. It was believed that investments in hedge funds and currency trading could never fail. The investors would get as much as 30 per cent return on their investments instead of the small interest on fix deposits or even the smaller returns from dividends paid to shareholders.

21. Millions of investors put their money in hedge funds and currency trading. It is estimated that 8000 hedge funds handle as much as 620 trillion dollars while the trade in currency was 20 times bigger than was world trade.

22. The sums are really enormous and the profits likewise. The investors numbering millions in the United States and Europe and some in Asia became millionaires, owning yachts and private jets. They contribute greatly to the high per capita incomes and Gross Domestic Products of their country. It is estimated that their contribution to these wealth indices amount to about 40 per cent.

23. But the investment by the hedge funds are not always profitable. Just as their profits would be 30 times more than the investments they manage, their losses too can be 30 times more than when investing in the original sum invested with them.

24. And when the loss occurs there is no way they can pay back the banks. The classic case was when the hedge from LTCM (Long Term Credit Management) collapsed totally; losing billions of dollars of the money they had borrowed and invested. They could not pay the banks.

25. It would seem that no matter which financial institutions or funds got hit, in the end the banks would be affected. And when the banks are affected all businesses would be affected. They would not be able to borrow enough money for capital or operations or payments. The banks would make margin calls when they get into trouble and when the borrowers fail they too would be unable to operate and to make money. They can be bankrupted and forced to close down.

26. The failures of the businesses would bring down the stock market which in turn would affect the businesses. In the end the whole economy would suffer and there would be a recession.

27. When such countries go into recession, the countries which depend on them as markets will also be dragged down. That is why the whole world has gone into recession or at least experience lower growth.

28. Why did all these things happen? Mainly it is because of greed and too much power being given to the banks to create money. Then there is this idea of free trade which is interpreted to mean freedom from Government supervision. Without Government supervision the players would abuse the systems. They would be motivated purely by greed.

29. This has been going on for decades. The great recession of 1929-1930 was due to the same kind of abuses. After that there were abuses which led to minor crisis and recessions usually of the poorer countries.

30. When the abuse involves only a bank or a few banks or a single hedge fund, Government would step in to cover up. As a result the failure of the systems and the abuses were not noticed. It seems as if the systems were working well.

31. But the failure of the sub-prime loans for housing was so huge that neither the banks nor the Government could have a cover-up operation. The banks just cannot balance their accounts. Once the banks’ losses were made known, those institutions and funds which were linked to or dependent on banking business were also exposed. Their losses proved to be equally enormous.

32. Initially there was an attempt to hide the true amount. Thus it was considered that a few billion dollars in bailouts would be sufficient to achieve recovery. But once the full extent of the abuses were revealed the figures shot up to trillions of dollars. Simple bailouts are no longer adequate.

33. In 1997-98 when Malaysia experienced its crisis we resorted to bailouts. But the collapse of the banks and the businesses were not due to their abuse of banking practice. It was due to external factors – namely the devaluations of the currency by currency traders.

34. The economic environment was still largely intact. It was still possible to do business if the banks had enough money to lend. So when the Government recapitalised the banks, the banks could recover through normal business and pay back the money to the Government.

35. This time the losses are huge and are due to the banks themselves abusing banking privileges. It is not possible to recover the money lost through doing normal business. It would not be enough to pay back the bail-out money.

36. The loss can only be recovered if the banks are allowed to resort to the abuses they were indulging in before. Since they cannot be allowed to do this they will not be able to recover the huge sums they have lost. They would forever be indebted to the government. In fact the Government would own them. This is of course socialistic and not capitalistic.

37. Bailouts would therefore not be able to achieve recovery of the economy. Certainly there is no way for returning to the status or conditions prevailing before the crisis. The rich countries must accept that they would become poorer, or at least not be as rich as they were before.

38. Again I would like to cite the experience of Malaysia. By 1999-2000 the crisis was over i.e. we were no longer troubled by the deliberate devaluations of the Malaysian currency. But the Malaysian currency did not recover fully.

39. At the time when the crisis hit us in 1997 the exchange rate was 2.5 Ringgit to one US Dollar. It went down to 5 Ringgit to one US Dollar at its peak. Now the currency is stabilised at 3.8 Ringgit to one US Dollar.

40. This means that our per capita and GDP in US Dollar terms is lower than what it should be if our Ringgit went back to 2.5 per US Dollar. The per capita today is 6000 USD. It should really be 9000 USD if the rate is 2.5 per USD.

41. It will be the same for the US, Britain, the European and Asian countries affected by the crisis. Indeed the GDP and per capita of the whole world will remain down. We would all be poorer because of the crisis. Real recovery i.e. to be back to the status quo ante will take a very long time. In fact we would have to grow at one and a half times the pre-crisis rate to recover fully. This is unachievable.

42. What can to be done now is not to bail out the failed banks and companies. They should be allowed to go bankrupt. The bailout money should go towards compensating the people who had trusted these institutions, though not for them to recover their losses completely. With purchasing power partly restored they would be able to keep the new banks and businesses profitable.

43. Other people should be allowed to start new banks, maybe with Government support. The new banks must be allowed less liberty to create money. Their business must be subjected to Government scrutiny. They must not be allowed to set up subsidiaries in tax havens. Their accounts must be submitted to the Central Banks which must all be Government owned. They should be confined to financing real businesses and trade.

44. Mergers and acquisitions in order to become big and so dominate the business must be subject to laws like the anti-trust laws. Big companies are prone to practicing monopolistic business. And as we have seen they are very prone to abuses by their managements and employees. Their power tends to deter Government examination of their activities.

45. Currency trading should be limited to financing trade. There should be no speculation and short selling. Their business must be transparent. They should be allowed to borrow only a limited amount of money.

46. What are the lessons for Asia? In the first place Asia must not accept Western ideas and systems without critical examination. If after critically studying what is proposed by Western countries Asians find faults or weaknesses, it is better to reject them or modify them. Asians should actively promote their own systems.

47. Thus in 1997-98 the system allowed massive currency trading involving short-selling. The market it was said will determine the value or exchange rate. Government should leave the market free to determine exchange rates.

48. The idea was sound. Demand for a currency would depend on the trade of a country. If the country is prosperous and the country’s currency would be needed in order to pay for the goods or the services exported from the country, then the value of the currency against a common trading currency such as the US Dollar would rise. The payment itself may be made in US Dollar but in the country the US Dollar should be converted to local currency. If the country imports more than the demand for the US Dollar would increase and the exchange rate would favour the US Dollar.

49. Unfortunately the market would create a degree of uncertainty. Predicting returns on prices and trade would be difficult as the currency might revalue or devalue when payments are to be made.

50. It is in order to minimise the effect of changes in the value of the currencies that hedging was designed. Hedging carries a cost that would affect the profits.

51. But currency traders deliberately selling huge amounts of the currency could devalue it at will. Apart from impoverishing the country, through devaluation a great deal of uncertainty would trouble businesses. Exporters and importers quoting at current exchange rates can easily lose if the currency is grossly devalued or revalued depending on whether they are selling or buying.

52. Malaysia faced with this dilemma in 1997 – 8 decided to fix the exchange rate by preventing currency traders from access to the Malaysian currency for trading purposes. In the eyes of the Western banks and financiers this was wrong. But fixing the exchange rate helped businesses to prepare their budgets and price their goods without fear of going wrong and losing money. In any case the original Bretton Woods agreement was about fixes exchange rates and not about the free market and floating currencies.

53. Malaysia was also advised by the IMF to have a surplus budget, to increase interest rates, to halve the time for declaring a loan non-performing, to let businesses in trouble go bankrupt etc. We rejected all these advise. We also refused to take International Monetary Fund loans as the condition was for us to surrender economic management of our country to the IMF.

54. As you may know by controlling the exchange rate and rejecting all the IMF advise Malaysia was able to recover much more quickly than the other East Asian countries. Today the whole world agrees that Malaysia did the right thing.

55. The lessons that we learnt from our 1997-98 experiences were not to uncritically accept the advice of the so-called international agencies. They may know something but they do not know everything. Their one size fits all solution cannot always work.

56. In the present crisis we have to understand the causes. I have tried to identify these causes above. But there must be many more.

57. Once we know and understand the causes then we can plan to avoid them. Sub-prime lending, creation of too much money by the banks, lack of Government supervision, leaving central banks in the hands of the private bankers etc etc must be avoided by Asians.

58. Having seen the disastrous results of the Western banking, and their monetary and financial systems, we must not assume that if we recover than the systems must be maintained. Recovery does not prove that the system is right. Whatever the results we must critically examine the present system.

59. The present crisis is due to systemic failure. We must therefore change the systems. Minor changes would not suffice. All the systems must be subjected to close critical analysis.

60. If the West insist in retaining the present system with only minor cosmetic changes, Asians must be ready to reject them, if necessary. Asians must learn and convince themselves that they have the ability to formulate and develop new systems which will not be so easy to abuse.

61. Asian economies are very strong and will grow stronger with time. Their influence on world economy is enormous. Systems developed by Asians should therefore be taken seriously, and if good, should be accepted by the world. Asians must not forever be following the rules and systems developed only by the Europeans.

62. Asians must therefore be prepared to develop new banking systems which would not be given the power to create unlimited money. The banks must have new sets of regulations and new supervision by trained Government agencies. There must be distinct limitations to what the banks are allowed to do. Bank financing should be limited to real business and trade. The loans must also be limited based on the assets owned by the banks. Loans in excess of this must be subjected to Government scrutiny and in big cases to Government approval.

63. The world needs to trade and trade financing must not be monopolised by any particular currency. A special trading currency needs to be created and be owned by all the countries of the world. The currency must be backed by gold or by reserves held by every country.

64. There must be no trading in currency except in financing trade. The value of national currencies must be fixed against the world trading currency not against any other currency. Revaluation and devaluation must be by comparison to the world trading currency.

65. The hedge funds must be open to public scrutiny if at all they are to be allowed. Their borrowings from banks must be based on a small multiple of the funds they hold. No subsidiaries or operations must be done from tax havens. All transactions must be open to Government scrutiny and by the managers of the special trading currency.

66. A new international anti-trust law must be introduced to curb mergers and acquisitions. There must be no monopoly in any business. The international community must break all monopolies so that ownership is distributed worldwide.

67. The monetary system needs to be changed. Today banks can create alternative currencies through cheques, credit cards, traveller’s cheques, entries into bank books, etc. This has led to more money being created than needed for trade. The excess money created is being used for all kinds of money make money schemes for the rich investors.

68. The exchange rates of the different currencies against each other must be fixed through a proper criteria. The market must not be allowed to play with exchange rates.

69. These are some of the suggestions that Asians can consider proposing to the world community. They need to be scrutinised and debated in a forum like the Bretton Woods. No country, Asian or European or African should be allowed to manipulate the forum through bribery, as is now being done by the rich countries.

70. This financial and economic crisis has taught us many lessons. It is not necessary to consider the European system as the best or the only one that can be used. Asians have the same capacity to think and innovate and they should be prepared to put up and defend their proposals for the world financial and economic reforms. But having said this Asians must as be prepared to hear and consider proposals coming from others.

71. In the end even after systemic changes the result will not be perfect. And so the monetary and financial forum must be maintained to examine and correct any shortcomings or failures, to curb any abuse.

72. I am not saying I have the solution or that my ideas are right and perfect. What I am trying to suggest is a change in mindset so that we can criticise and change even the most long-standing ideas. Only if we are prepared to do this can we put an end to repeating our mistakes over and over again.

Happy Mothers Day to all Mothers.

Thank you for bringing us into this world.

(please click the picture to have a better view, thanks)

Apabila roh keluar dari jasad, ia akan berkata-kata dan seluruh isi alam sama ada di langit atau bumi akan mendengarnya kecuali jin dan manusia. Apabila mayat dimandikan, lalu roh berkata : "Wahai orang yang memandikan, aku minta kepadamu kerana Allah untuk melepaskan pakaianku dengan perlahan-lahan sebab pada saat ini aku beristirahat daripada seretan malaikat maut". Selepas itu, mayat pula bersuara sambil merayu : "Wahai orang yang memandikan, janganlah engkau menuangkan airmu dalam keadaan panas. Begitu juga jangan menuangnya dengan air yang dingin kerana tubuhku terbakar apabila terlepasnya roh dari tubuh".

Apabila dimandikan, roh sekali lagi merayu :"Demi Allah, wahai orang yang memandikan jangan engkau menggosok aku dengan kuat sebab tubuhku luka-luka dengan keluarnya roh". Setelah dimandi dan dikafankan, telapak kaki mayat diikat dan ia pun memanggil-manggil dan berpesan lagi supaya jangan diikat terlalu kuat serta mengafani kepalanya kerana ingin melihat wajahnya sendiri, anak-anak, isteri atau suami buat kali terakhir kerana tidak dapat melihat lagi sampai Hari Kiamat.

Sebaik keluar dari rumah lalu ia berpesan : "Demi Allah, wahai jemaahku, aku telah meniggalkan isteriku menjadi Balu. Maka janganlah kamu menyakitinya.Anak-anakku telah menjadi yatim dan janganlah kalian Menyakiti mereka. Sesungguhnya pada hari itu aku telah keluar dari rumahku dan aku tidak akan dapat kembali kepada mereka buat selama-lamanya". Sesudah mayat diletakkan pada pengusung, sekali lagi diserunya kepada jemaah supaya jangan mempercepatkan mayatnya ke kubur selagi belum mendengar suara anak-anak dan sanak saudara buat kali terakhir.

Sesudah dibawa dan melangkah sebanyak tiga langkah dari rumah, roh pula berpesan: "Wahai Kekasihku, wahai saudaraku dan wahai anak-anakku, jangan kamu diperdaya dunia sebagaimana ia memperdayakan aku dan janganlah kamu lalai ketika ini sebagaimana ia melalaikan aku". "Sesungguhnya aku tinggalkan apa yang aku telah aku kumpulkan untuk warisku dan sedikitpun mereka tidak mahu menanggung kesalahanku". "Adapun didunia, Allah menghisab aku, padahal kamu berasa senang dengan keduniaan. Dan mereka juga tidak mahu mendoakan aku".

Ada satu riwayat drp Abi Qalabah mengenai mimpi beliau yang melihat kubur pecah. Lalu mayat-mayat itu keluar dari duduk di tepi kubur masing-masing. Bagaimanapun tidak seorang pun ada tanda-tanda memperolehi nur di muka mereka. Dalam mimpi itu, Abi Qalabah dapat melihat jirannya juga dalam keadaan yang sama. Lalu dia bertanya kepada mayat jirannya mengenai ketiadaan nur itu. Maka mayat itu menjawab: "Sesungguhnya bagi mereka yang memperolehi nur adalah kerana petunjuk drpd anak-anak dan teman-teman. Sebaliknya aku mempunyai anak-anak yang tidak soleh dan tidak pernah mendoakan aku".

Setelah mendengar jawapan mayat itu, Abi Qalabah pun terjaga. Pada malam itu juga dia memanggil anak jirannya dan menceritakan apa yang dilihatnya dalam mimpi mengenai bapa mereka. Mendengar keadaan itu, anak-anak jiran itu berjanji di hadapan Abi Qalabah akan mendoa dan bersedekah untuk bapanya. Seterusnya tidak lama selepas itu, Abi Qalabah sekali lagi bermimpi melihat jirannya. Bagaimanapun kali ini jirannya sudah ada nur dimukanya dan kelihatan lebih terang daripada matahari.

Baginda Rasullullah S.A.W berkata:"Apabila telah sampai ajal seseorang itu maka akan masuklah satu kumpulan malaikat ke dalam lubang-lubang kecil dalam badan dan kemudian mereka menarik rohnya melalui kedua-dua telapak kakinya sehingga sampai kelutut. Setelah itu datang pula sekumpulan malaikat yang lain masuk menarik roh dari lutut hingga sampai ke perut dan kemudiannya mereka keluar. Datang lagi satu kumpulan malaikat yang lain masuk dan menarik rohnya dari perut hingga sampai ke dada dan kemudiannya mereka keluar.Dan akhir sekali datang lagi satu kumpulan malaikat masuk dan menarik roh dari dadanya hingga sampai ke kerongkong dan itulah yang dikatakan saat nazak orang itu."

Sambung Rasullullah S.A.W. lagi:"Kalau orang yang nazak itu orang yang beriman, maka malaikat Jibrail A.S. akan menebarkan sayapnya yang di sebelah kanan sehingga orang yang nazak itu dapat melihat kedudukannya di syurga. Apabila orang yang beriman itu melihat syurga, maka dia akan lupa kepada orang yang berada di sekelilinginya. Ini adalah kerana sangat rindunya pada syurga dan melihat terus pandangannya kepada sayap Jibrail A.S. "Kalau orang yang nazak itu orang munafik, maka Jibrail A.S. akan menebarkan sayap di sebelahkiri. Maka orang yang nazak tu dapat melihat kedudukannya di neraka dan dalam masa itu orang itu tidak lagi melihat orang di sekelilinginya. Ini adalah kerana terlalu takutnya apabila melihat neraka yang akan menjadi tempat tinggalnya.

Dari sebuah hadis bahawa apabila Allah S.W.T. menghendaki seorang mukmin itu dicabut nyawanya maka datanglah malaikat maut. Apabila malaikat maut hendak mencabut roh orang mukmin itu dari arah mulut maka keluarlah zikir dari mulut orang mukmin itu dengan berkata: "Tidak ada jalan bagimu mencabut rohorang ini melalui jalan ini kerana orang ini sentiasa menjadikan lidahnya berzikir kepada Allah S.W.T." Setelah malaikat maut mendengar penjelasan itu, maka dia pun kembali kepada AllahS.W.T.dan menjelaskan apa yang diucapkan oleh lidah orang mukmin itu.

Lalu Allah S.W.T. berfirman yang bermaksud: "Wahai malaikat maut, kamu cabutlah ruhnya dari arah lain." Sebaik saja malaikat maut mendapat perintah Allah S.W.T. maka malaikat maut pun cuba mencabut roh orang mukmin dari arah tangan. Tapi keluarlah sedekah dari arah tangan orang mukmin itu, keluarlah usapan kepala anak-anak yatim dan keluar penulisan ilmu. Maka berkata tangan: Tidak ada jalan bagimu untuk mencabut roh orang mukmin dariarah ini, tangan ini telah mengeluarkan sedekah,tangan ini mengusap kepala anak-anak yatim dan tangan ini menulis ilmu pengetahuan." Oleh kerana malaikat maut gagal untuk mencabut roh orang mukmin dari arah tangan maka malaikat maut cuba pula dari arah kaki. Malangnya malaikat maut juga gagal melakukan sebab kaki berkata: Tidak ada jalan bagimu dari arah ini Kerana kaki ini sentiasa berjalan berulang alik mengerjakan solat dengan berjemaah dan kaki ini juga berjalan enghadiri majlis-majli! s ilmu." Apabila gagal malaikat maut,mencabut roh orang mukmin dari arah kaki, maka malaikat maut cuba pula dari arah telinga. Sebaik saja malaikat maut menghampiri telinga maka telinga pun berkata: "Tidak ada jalan bagimu dari arah ini kerana telinga ini sentiasa mendengar bacaan Al-Quran dan zikir." Akhir sekali malaikat maut cuba mencabut orang mukmin dari arah mata tetapi baru saja hendak menghampiri mata maka berkata mata: "Tidak ada jalan bagimu dari arah ini sebab mata ini sentiasa melihat beberapa mushaf dan kitab-kitab dan mata ini sentiasa menangis kerana takutkan Allah." Setelah gagal maka malaikat maut kembali kepada Allah S.W.T. Kemudian AllahS.W.T. berfirman yang bermaksud:"Wahai malaikatKu, tulis AsmaKu ditelapak tanganmu dan tunjukkan kepada roh orang yang beriman itu." Sebaik saja mendapat perintah AllahS.W.T. maka malaikat maut menghampiri roh orang itu dan menunjukkan AsmaAllah S.W.T. Sebaik saja melihat Asma Allah dan cintanya kepada AllahS.W.T maka keluarl! ah roh tersebut dari arah m ulut dengan tenang.

Abu Bakar R.A. telah ditanya tentang kemana roh pergi setelah ia keluar dari jasad. Maka berkata Abu Bakar R.A: "Roh itu menuju ketujuh tempat:-
1. Roh para Nabi dan utusan menuju ke Syurga Adnin.
2. Roh para ulama menuju ke Syurga Firdaus.
3. Roh mereka yang berbahagia menuju ke Syurga Illiyyina.
4. Roh para shuhada berterbangan seperti burung di syurga mengikut kehendak mereka.
5.Roh para mukmin yang berdosa akan tergantung di udara tidak di bumi dan tidak di langit sampai hari kiamat.
6. Roh anak-anak orang yang beriman akan berada di gunung dari minyak misik.
7.Roh orang-orang kafir akan berada dalam neraka Sijjin,mereka diseksa berserta jasadnya hingga sampai hari Kiamat."

Telah bersabda Rasullullah S.A.W: Tiga kelompok manusia yang akan dijabat tangannya oleh para malaikat pada hari mereka keluar dari kuburnya:-
1. Orang-orang yang mati syahid.
2. Orang-orang yang mengerjakan solat malam dalam bulan ramadhan.
3. Orang berpuasa di hari Arafah.

Sekian untuk ingatan kita bersama.

"All praise is due to Allah, so we praise Him, and seek His pardon and we turn to Him. We seek refuge with Allah from the evils of ourselves and from the evil consequences of our deeds. Whom Allah guides aright there is none to lead him astray; and there is none to guide him aright whom Allah leads astray. I bear witness that there is no God but Allah, the One, having no partner with Him. His is the sovereignty and to Him is due all praise. He grants life and causes death and is Powerful over everything. There is no God but Allah, the One; He fulfilled His promise and granted victory to His bondsman, and He alone routed the confederates (of the enemies of Islam).

O’ People! Listen to my words, for I do not know whether we shall ever meet again and perform Hajj after this year. O’ Ye people! Allah says, O’ people We created you from one male and one female and made you into tribes and nations, so as to be known to one another. Verily in the sight of Allah, the most honoured amongst you is the one who is most God-fearing. There is no superiority for an Arab over a non-Arab and for a non-Arab over an Arab, nor for the white over the black nor for the black over the white except in God-conciousness.

All mankind is the progeny of Adam and Adam was fashioned out of clay. Behold; every claim of privilage whether that of blood or property, is under my heels except that of the custody of the Ka’bah and supplying of water to the pilgrims, O’ people of Quraish, don’t appear (on the Day of Judgement) with the burden of this world around your necks, whereas other people may appear (before the Lord) with the rewards of the hereafter. In that case I shall avail you naught against Allah.

Behold! All practice of the days of ignorance are now under my feet. The blood revenges of the days of ignorance are remitted. The first claim on blood I abolish is that of Ibn Rabiah bin Harith who was nursed in the tribe of Sa’ad and whom the Hudhayls killed. All interest and usurious dues accruing from the times of ignorance stand wiped out. And the first amount of interest that I remit is that which Abbas ibn Abd-al Muttalib had to receive. Verily it is remitted entirely.

O’ people! Verily yor blood, your property and your honour are sacred and inviolable until you appear before your Lord, as the sacred inviolability of this day of yours, this month of yours and this very town (of yours). Verily you will soon meet your Lord and you will be held answerable for your actions.

O’ people! Verily you have got certain rights over your women and your women have certain rights over you. It is your right upon them to honour their conjugal rights, and not to commit acts of impropriety, which if they do, you are authorised by Allah to separate them from your beds amd chastise them, but not severely, and if they refrain, then clothe and feed them properly.

Behold! It is not permissible for a woman to give anything from the wealth of her husband to anyone but with his consent.

Treat the women kindly, since they are your helpers and not in a position to manage their affairs themselves. Fear Allah concerning women, for verily you have taken them on the security of Allah and have made their persons lawful unto you by words of Allah.

O’ people! Allah, the Mighty and Exalted, has ordained to every one his due share (of inheritance). Hence there is no need (of special) testament for an heir (departing from the rules laid down by the Shari’ah).

The child belongs to the marriage-bed and the violator of wedlock shall be stoned. And Reckoning of their (deeds) rests with Allah.

He who attributes his ancestry to other than his father or claims his clientship to other than his master, the curse of Allah is upon him.

All depts must be repaid, all borrowed property must be returned, gifts should be reciprocated and a surety must make good the loss to the assured.

Beware! No one committing a crime is responsible for it but himself. Neither the child is responsible for the crime of his father, nor the father is responsible for the crime of his child.

Nothing of his brother is lawful for a Muslim except what he himself gives willingly. So do not wrong yourselves.

O’ People! Every Muslim is the brother of every other Muslim, and all the Muslims form one brotherhood. And your slaves; see that you feed them with such food as you eat yourselves, and clothe them with the clothes that you yourselves wear.

Take heed not to go astray after me and strike one another’s necks. He who (amongst you) has any trust with him, he must return it to its owner.

O’ people! Listen and obey, though a mangled Abyssinian slave is appointed your Amir, provided he executes (the Ordinance of) the Book of Allah among you.

O’ people! No Prophet would be raised after me and no new Ummah (would be formed) after you.

Verily I have left amongst you that which will never lead you astray, the Book of Allah, which if you hold fast you shall never go astray.

And beware of transgressing the limits set in the matters of religion, for it is transgression of (the proper bounds of) religion that brought destruction to many people before you.

Verily, the satan is disappointed at ever being worshipped in this land of yours, but he will be pleased by obedience in anything (short of worship that is) in matters you may be disposed to think insignificant, so beware of him in your matters of religion.

Behold! Worship your Lord; offer prayers five times a day; observe fast in the month of Ramadhaan; pay readily the Zakat (poor due) on your property; and perform pilgrimage to the House of God and obey your rulers and you will be admitted to the Paradise of your Lord.

Let him that is present, convey it unto him who is absent, for many people to whom the message is conveyed may be more mindful of it than the audience.

And if you were asked about me, what would you say?"

They answered, "We bear witness that you have conveyed the trust (of religion) and discharged your ministry of Prophethood and looked to our welfare."

Thereupon Allah’s Messenger (may peace be upon him) lifted his forefinger towards the sky and then pointing towards people said,

"O’ Lord: Bear Thou witness unto it.

The Last Sermon Of Holy Prophet“Oh mankind; listen well. I may not be with you much longer, the weak among you feed them on what you eat, dress them as you are dressed. You will meet your GOD and he will call you to account for your action. Let those who are present warn those who are absent. You are all descendent from Adam and the best among you is he who most regards GOD. Think deeply of what I say, let all you feuds be abolished, you must know that every Muslim is the brother of every other Muslim and all Muslims are brother of one another, between Muslims their are no races and no tribes. You must not take anything from your brother except what is given freely. Do not oppress and do not be oppressed. Oh my people I am but a man, it may be that the angel of death will visit me soon and death will overtake me. But I have left you a book, revealed by GOD, the Quran which is light and guidance”. At the end he repeated to the people the final revelation of Quran, the seal and termination, not Mohammad’s words but GOD’s words, "This day I have perfected your religion for you and completed my favour to you and have choosen for you Islam as your religion.”

My mom only had one eye. I hated her... she was such an embarrassment.

She cooked for students & teachers to support the family.

There was this one day during elementary school where my mom came to say hello to me. I was so embarrassed.

How could she do this to me?

I ignored her, threw her a hateful look and ran out.

The next day at school one of my classmates said, 'EEEE, your mom only has one eye!'

I wanted to bury myself. I also wanted my mom to just disappear.

I confronted her that day and said, ' If you're only gonna make me a laughing stock, why don't you just die?'

My mom did not respond...

I didn't even stop to think for a second about what I had said, because I was full of anger. I was oblivious to her feelings.

I wanted out of that house, and have nothing to do with her.

So I studied real hard, got a chance to go abroad to study.

Then, I got married.

I bought a house of my own. I had kids of my own.

I was happy with my life, my kids and the comforts, Then one day, my mother came to visit me.

She hadn't seen me in years and she didn't even meet my wife and her grandchildren.

When she stood by the door, my children laughed at her, and I yelled at her for coming over uninvited.

I screamed at her, 'How dare you come to my house and scare my children!' GET OUT OF HERE! NOW!!!'

And to this, my mother quietly answered, 'Oh, I'm so sorry. I may have gotten the wrong address,' and she disappeared out of sight.

One day, a letter regarding a school reunion came to my house.

So I lied to my wife that I was going on a business trip.

After the reunion, I went to the old shack just out of curiosity.

My neighbors said that she died. I did not shed a single tear.

They handed me a letter that she had wanted me to have.

'My dearest son, I think of you all the time. I'm sorry that I came to your house and scared your children. I was so glad when I heard you were coming for the reunion. But I may not be able to even get out of bed to see you. I'm sorry that I was a constant embarrassment to you when you were growing up. You see........when you were very little, you got into an accident, and lost your eye. As a mother, I couldn't stand watching you having to grow up with one eye, So I gave you mine. I was so proud of my son who was seeing a whole new world for me, in my place, with that eye. With all my love to you,

Your mother.

There is nothing like a mother's love.