Indonesian financial crisis<\/p>\n
The overload of opinions, comment and criticisms from sources
\nboth inside and outside Indonesia concerning the uncontrolled
\nnosedive of the rupiah, can be summarized simply and considered
\nlogically rather than emotionally. Whether or not the
\n\"fundamentals\" of the Indonesian economy remain sound or not,
\ndoes not impact on the situation or any solution.<\/p>\n
As has been stated many times, this is a crisis of
\n\"confidence\" and such crisis occur regularly all over the world.
\nWe Brits and the pound sterling have often been victims, the most
\nnoteworthy episode being in 1992 when the infamous George Soros
\nmade 1.5 billion pounds sterling in one day by speculating on the
\npound. He was able to do this because our government of the time
\nhad led us straight into the crisis, which everyone in UK knew
\nwas coming, except the government. It has been said that the
\nmassive funds available to groups as large as Soros and his
\nbackers' co-investors, enable them to move markets, which of
\ncourse is true, but let's not forget, had our government and the
\nBank of England used our reserves to support the pound, Soros and
\nothers would have failed. Similarly, the Prime Minister of
\nMalaysia is right to accuse the same speculators. However,
\nresponses in ASEAN countries, like Malaysia, such as unclear
\npolicies, unimplemented policies and hoping the nightmare will go
\naway, etc., ensure the speculators make more money not less, and
\ncreate the \"crisis of confidence.\"<\/p>\n
Witnessing the attack on the Thai baht, Indonesia could have
\nassumed that this was unlikely to happen to the rupiah, except
\nthat for the last five years, conglomerates have been insidiously
\nand continuously borrowing massive amounts of dollars. The
\nIndonesian government can hardly be criticized for this, as, for
\nmost of that period, such borrowings were illegal. We have seen
\nthe consequence since August -- a continuing mad scramble to dump
\nthe rupiah to buy dollars to service their loans, creating an
\nenormous demand and battering the rupiah into submission.<\/p>\n
Inefficiency, corruption and collusion, are for others to
\ncomment on, but, as a layman, I see such factors as having little
\nimpact on what has happened, as the strength of the country, its
\nhistoric performance, and its sheer potential dwarf the likes of
\nMalaysia, Thailand and the Philippines.<\/p>\n
Over the years we Brits have had sets of conditions imposed by
\nthe IMF, and have rescued ourselves -- this will only happen here
\nif the country follows the advice of Wimar Witoelar, who, in a
\nwell crafted article in The Jakarta Post (Oct. 11, 1997),
\nsummarizes by saying \"Don't repeat old habits after the IMF
\ncure.\"<\/p>\n
Whatever the outcome, Indonesia, like every country in the
\nworld linking to the dollar, will always, repeat always, be at
\nthe mercy of one single individual -- the U.S. Federal Reserve
\nChairman -- whenever he speaks, world markets move one way or
\nanother, mostly down, and therefore \"crisis of confidence\" are a
\npermanent danger.<\/p>\n
For those here still with money to invest, whether in this
\ncountry (surely a great opportunity now to buy shares here?) or
\nworldwide, the wisdom lies in remembering that financial markets
\nmove in cycles, dictated primarily by interest rates. The USA and
\nEuropean low interest rates currently look set to remain or go
\neven lower still, and, with bank deposits providing meager
\nreturns, investors there prefer stocks and bonds, which causes
\nthe prices to rise. In Indonesia now, we have the reverse
\nsituation -- bank deposit rates remain astronomically high,
\nstocks and bonds conversely ridiculously low -- surely Indonesia
\nnow offers some of the best opportunities in the world -- place
\nyour money in short term, very high interest deposits, and, as
\nthe interest rates start to drop in the near future, buy shares
\nin the \"blue chips\" here, as difficult times like this are,
\nalmost without exception, followed by strong rallies.<\/p>\n
BILL GUERIN<\/p>\n
Jakarta<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/indonesian-financial-crisis-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }