Wednesday, October 29, 2008

The Runaway Rupiah



Even thoug it is less than 30 % drop in Australian dollar, but this week saga has brought some panic in financial authority.

Will the ten steps help?

It was good policy and a detailed prescription. But we could not do it alone.

What needed now is real money put down the table by global institution or collection of economically strong states (east asia and middle east comes first to mind) saying they will help the country in need to protect exchange rate.


And by real money I am not referring to paltry USD 80 billion comitted at last ASEM meeting. Certainly not enough to scare off potential speculators.

I am disappointed that the amount was not even half the US bailout tag (USD 700 billion). Confidence to Indonesia's should is also headed south when our reserve shrunken more than 10 % (7 trillion rupiah) for Indover bailout.

This week will be a bumpy ride for rupiah. Hold on tight.

Addendum:
Indover is getting the bail out (click here) and rupiah is steady close to 11 thousand.
As Keynes said; "if one must forecast, forecast often." Especially true in this fast pace and changing policy



Tuesday, October 28, 2008

Economist are Running the Obama Campaign


Read this quote from Slate magazine on Obama campaign decision to used sms as major campaigning tools:

Green and Gerber estimate that a door-canvassing operation costs $16 per hour, with six voters contacted each hour; if you convince one of every 14 voters you canvass, you're paying $29 for each new voter. A volunteer phone bank operation will run you even more—$38 per acquired voter. This is the wondrous thing about text-messaging: Studies show that text-based get-out-the-vote appeals win one voter for every 25 people contacted. That's nearly as effective as door-canvassing, but it's much, much cheaper. Text messages cost about 6 cents per contact—only $1.50 per new voter.
If Obama win, dont forget the part played an army of economists with cost benefit analysis as weapon. Politician, ignore economists at your perils!

Sunday, October 26, 2008

And Bakrie's stock will be unsuspend tomorrow


Tomorrow will not be be bottoming out of the indonesian stock market after a month of sliding downhill.
Bakrie, how quick can you say suspension?
(my guess is less than an hour)

Addendum:
The suspension is extended. Thanks for treespotter for spotting it.





Tuesday, October 21, 2008

Do what you told to us, you lucky b*$&d

Well, that's pretty much what the essence of my article about US and financial crisis in today's Jakarta Post

Its kind of annoying but relieving to be told of being wrong but to watch the doctor have to swallow their own medicine that they gave to us.

Click here to read in full.

Wednesday, October 15, 2008

Its Krugman

Nobel Prize of Economics this year is fallen into Krugman's lap.

He got it for his contribution to trade and economic geography (Nobel citation here) but his role as columnist in Slate and New York Times is not less important. He is one of the consistent critic, with strong data and analysis, of Bush administration since beginning when everyone keep silent.

His explanation of monetary policy with baby sitting analogy (click here) is simply a masterpiece and who can forget that ideas move the world when couple of days after his famous column (click here) then Mahathir implement the highly successful capital control in Malaysia.

Three cheers for rigourous economist that also managed to communicate complex idea to the public.

Addendum:
Some post announcement analysis here, here and here as well as here

Sunday, October 12, 2008

Persepsi kemapanan versus krisis

Kita mungkin tidak pernah mengira persepsi mengenai kemapanan bisa menarik ke jurang krisis ekonomi. Sebuah tulisan di newsweek mengungkapkan bagaimana 'American dream' berubah menjadi resesi dunia. Bagaimana hal ini terjadi?

Konon di Amerika sono, persepsi kemapanan bagi masyarakat adalah masyarakat yang memiliki rumah dan fortofolio saham. Bagi negara yang pasar keuangannya sudah berkembang tidak mengherankan jika setiap orang mempunyai berinvestasi di saham. Demikian pula dengan rumah, kepemilikannya menggambarkan suatu ide dimana didalamnya hidup keluarga yang bahagia dan sejahtera.

Seperti apa persepsi kemapanan di Indonesia? Bagaimana persepsi yang sama berpotensi mendorong krisis? temukan bacaannya disini.

Saturday, October 11, 2008

By all means neccessary

That what the G7 leaders what they will do to unfreeze credit and money markets as well as reducing the impact of coming global recession (complete article here, complete G7 communique here).

Let's hope that the meetings of finance ministers in DC show similar resolve and more detail


Friday, October 10, 2008

Krugman - Minister of Finance of the world, (please) unite!

Krugman always has a knack for explaining complicated economics stuff. This time he outdo himself (click here to read in full):
The current crisis started with a burst housing bubble, which led to widespread mortgage defaults, and hence to large losses at many financial institutions. That initial shock was compounded by secondary effects, as lack of capital forced banks to pull back, leading to further declines in the prices of assets, leading to more losses, and so on — a vicious circle of “deleveraging.” Pervasive loss of trust in banks, including on the part of other banks, reinforced the vicious circle.
...
But on Wednesday the British government, showing the kind of clear thinking that has been all too scarce on this side of the pond, announced a plan to provide banks with £50 billion in new capital — the equivalent, relative to the size of the economy, of a $500 billion program here — together with extensive guarantees for financial transactions between banks. And U.S. Treasury officials now say that they plan to do something similar, using the authority they didn’t want but Congress gave them anyway.

...

The question now is whether these moves are too little, too late. I don’t think so, but it will be very alarming if this weekend rolls by without a credible announcement of a new financial rescue plan, involving not just the United States but all the major players.

Why do we need international cooperation? Because we have a globalized financial system in which a crisis that began with a bubble in Florida condos and California McMansions has caused monetary catastrophe in Iceland. We’re all in this together, and need a shared solution.

Why this weekend? Because there happen to be two big meetings taking place in Washington: a meeting of top financial officials from the major advanced nations on Friday, then the annual International Monetary Fund/World Bank meeting Saturday and Sunday. If these meetings end without at least an agreement in principle on a global rescue plan — if everyone goes home with nothing more than vague assertions that they intend to stay on top of the situation — a golden opportunity will have been missed, and the downward spiral could easily get even worse.

What should be done? The United States and Europe should just say “Yes, prime minister.” The British plan isn’t perfect, but there’s widespread agreement among economists that it offers by far the best available template for a broader rescue effort.

And the time to act is now. You may think that things can’t get any worse — but they can, and if nothing is done in the next few days, they will.


Minister of Finance of the world, (please) unite!!


Sunday, October 05, 2008

The economics of Iedul Fitri


The Jakarta Post wrote an interesting and blog-econ style article on the subject, click here to read.