Thaksin based idea, a Mini-Asian-IMF, gets funding boost

[alaungphaya]

Perhaps @madokafc @NarThoD @powastick would want to discuss the 97 crisis and the IMF in this thread.

 

[Nike]

The major problems that have emerged within Indonesia's finance and banking system at the time is, of course, the rapid fall in exchange rates in other Southeast Asian countries such as Thailand, South Korea and Malaysia since mid-1997. These trends have been exacerbated by continuing sluggish growth in Japan. These events have become well known in the Australian media under labels like the 'Asian economic crisis' or 'Asian financial meltdown'. Such descriptions are fairly misleading, however, because the crisis has by no means affected the whole of Asia (China, Taiwan and India have escaped serious problems) and the effects have varied greatly throughout the region. While the majority of commentators and observers consider that most of the affected countries will have returned to economic health within one or two years, there is much less optimism about Indonesia because at the time, my country's political weakness has meant that we has not yet developed an effective policy to response the economic crisis roaming at our door steps. The prospect of political turmoil is certain to undermine foreign investor confidence to come to Indonesia, deterring the inflow of the foreign capital essential for restoring the value of my country's currency, the rupiah, and for restarting economic growth.

Our rupiah was initially not affected by the pressure on other regional currencies. When it begin to fall, however, the underlying weakness of the Indonesian financial sector was revealed and private foreign debt was far higher than previously thought. The crisis worsened in Indonesia because of the lack of an effective government policy response.

The International Monetary Fund (IMF) financial stabilisation package agreed to by the Indonesian Government contained conditions requiring Indonesia to reform its financial sector, reduce fiscal expenditure and radically change the nature of government involvement in the economy. Disagreements between the Indonesian Government and the IMF over implementation of the reforms have become the focus for controversy about the role of the IMF. Much of the controversy derives from the fact that the IMF offered a combination of financial rescue package and economic reform program. The IMF has been criticised for applying a formula which was inappropriate for Indonesia, was too difficult to implement in the time allowed and did not alleviate the immediate problems. The IMF position is that while the details of the package can be renegotiated, such crises will recur unless Indonesia's economic institutions are reformed.

The currency crisis has combined with the effects of drought to produce rapid inflation, especially in the cost of food and other essentials, and a great increase in unemployment and underemployment (around 8.7 million and 18.4 million respectively if i am not mistaken about this details parts, around 30 per cent of the workforce). The return of poverty for many Indonesians and the end to short-lived affluence for others has shattered the expectations, created by the economic achievements of the New Order regime, that Indonesia was on the path to continued growth and prosperity.

Much of the reason for controversy surrounding the IMF program derives from its character as a combination of financial rescue package and economic reform program. The IMF has been criticised for using loans designed for immediate stabilisation to force Indonesia to adopt major policy reforms, the scope of which would be difficult for even a developed country such as Australia to introduce in such a short time. A number of commentators have argued that an international financial institution has no place enforcing a program which appears to be aimed at applying pressure for political change within Indonesia and which, it is argued, infringes Indonesia's sovereignty. From the point of view of the IMF, however, there is little point providing emergency finance to stabilise the Indonesian currency if the structural problems seen to be behind the crisis are not ameliorated. IMF also considers that confidence in the Indonesian currency will not be restored unless international investors are reassured that the Indonesian Government is prepared to take measures which confront the structural problems in the economy, despite the political and social pain they may cause.

With the our Government showing itself to be increasingly uncomfortable with the IMF reform program, some observers and pragmatic politicians have seen the situation in Jakarta since late last year as one of virtual policy paralysis. While surely Indonesian Government has been inconsistent in its commitment to implementing reform, it has done little to develop alternative policies, even for the short term. A proposal to introduce a Currency Board system, under which each rupiah would be backed by US dollar reserves, was widely criticised as unworkable and aimed at securing the assets of powerful business interests rather than in solving the country's currency problems. Moreover, the indecisive debate over the proposal occupied several months of precious time, during which Indonesia's economic difficulties have become increasingly urgent. Our Government's incapacity to come to terms with the depth of the problems it faces was also seen to be exemplified in the Budget delivered in late 1997 which contained completely unrealistic estimates of the coming year's economic growth and fiscal balance and which had to be revised drastically downwards in a new Budget announced in January 1998 if i am not mistaken the months.

And the rest happened as we already know.......

@nufix @Reashot Xigwin @Indos @LeveragedBuyout @Nihonjin1051 @NarThoD

 

[Indos]

Indonesia is saved by printing money and political solution which is done by ourselves. It is more like psychological than economical. IMF just put some account at our Central Bank and we have to pay the interest. I dont know whether we really use their money at that moment.

I can say that our God and people who saved our economy at that time. IMF positive role in Indonesia during that time is doubtful

The good part of it is that 97/98 crisis result in political reform and our currency becomes so low which is good for our economic competitiveness.

IMF is more like using us, not helping. They want our aerospace industry death. Thats why N 250 plane prototype dont get developed further.

And now we fund them...

 

[LeveragedBuyout]

The International Monetary Fund (IMF) financial stabilisation package agreed to by the Indonesian Government contained conditions requiring Indonesia to reform its financial sector, reduce fiscal expenditure and radically change the nature of government involvement in the economy. Disagreements between the Indonesian Government and the IMF over implementation of the reforms have become the focus for controversy about the role of the IMF. Much of the controversy derives from the fact that the IMF offered a combination of financial rescue package and economic reform program. The IMF has been criticised for applying a formula which was inappropriate for Indonesia, was too difficult to implement in the time allowed and did not alleviate the immediate problems. The IMF position is that while the details of the package can be renegotiated, such crises will recur unless Indonesia's economic institutions are reformed.

...

Much of the reason for controversy surrounding the IMF program derives from its character as a combination of financial rescue package and economic reform program. The IMF has been criticised for using loans designed for immediate stabilisation to force Indonesia to adopt major policy reforms, the scope of which would be difficult for even a developed country such as Australia to introduce in such a short time. A number of commentators have argued that an international financial institution has no place enforcing a program which appears to be aimed at applying pressure for political change within Indonesia and which, it is argued, infringes Indonesia's sovereignty. From the point of view of the IMF, however, there is little point providing emergency finance to stabilise the Indonesian currency if the structural problems seen to be behind the crisis are not ameliorated. IMF also considers that confidence in the Indonesian currency will not be restored unless international investors are reassured that the Indonesian Government is prepared to take measures which confront the structural problems in the economy, despite the political and social pain they may cause.

Perfectly explained, especially the part I excerpted about the controversy surrounding the IMF. My point earlier in the thread was that whatever alternative to the IMF that Asia produces, it will have no choice but to behave in the same way. Look at the EU--it keeps bailing out economies, only to see them descend into crisis again and again. The true solution is something along the lines of Germany's Hartz series of reforms, and indeed, a crisis is precisely the time that such politically difficult decisions are possible. For some reason, most politicians lack the vision and patriotism to do what is right for the long term, as opposed to what is best for their own political careers in the short term.

 

[powastick]

Malaysia went the opposite way during the 1997, instead of accepting IMF bailout, Malaysia imposed strict capital control following China footstep. Ringgit was pegged at RM3.80 while making selling ringgit very unattractive to any speculators. From 20+ bank was merge to less than 10 and all NPL\Bad Debt was carefully manage. Companies weren't allowed to bust and government encourage White Knight rescue of troubled companies preventing massive layoff and affecting any downstream companies.

There were a lot of skepticism about Mahathir move to impose capital control but he prove us wrong.

 

[Nike]

Indonesia is saved by printing money and political solution which is done by ourselves. It is more like psychological than economical. IMF just put some account at our Central Bank and we have to pay the interest. I dont know whether we really use their money at that moment.

I can say that our God and people who saved our economy at that time. IMF positive role in Indonesia during that time is doubtful

The good part of it is that 97/98 crisis result in political reform and our currency becomes so low which is good for our economic competitiveness.

IMF is more like using us, not helping. They want our aerospace industry death. Thats why N 250 plane prototype dont get developed further.

And now we fund them...

The economic and political crisis in Indonesia had its genesis outside the country and did not at first appear to present major difficulties for a country whose macroeconomic management was reputed to be generally sound. Once the uncertainty about many Asian currencies began to affect Indonesia, however, the major structural problems in the country's financial sector and the real level of its private foreign debt became obvious and took the rupiah to levels far below those of other falling currencies in the region. Although the current exchange rate is generally regarded to vastly exaggerate the real problems of the Indonesian economy, the rupiah has not yet recovered because the Government's response to the crisis has only served to undermine international confidence in the currency. Let alone we can effectively to execute any major economics reforms as per IMF has instructed at such short time frames, at the times our politician and economist doesn't have any insight and hints how to cope with the crisis, in short they doesn't know what kind of economics crisis had been struck Indonesia.

We can compare on how our government performance to copes with 2008 economics crisis in which has a massive and more destructive effect to any financial institution around the world, in 2008 we can effectively took the most appropriate shield to cover our economics performance, much better even to the most taunted economic performer in the region, Singapore.

 

[alaungphaya]

Malaysia went the opposite way during the 1997, instead of accepting IMF bailout, Malaysia imposed strict capital control following China footstep. Ringgit was pegged at RM3.80 while making selling ringgit very unattractive to any speculators. From 20+ bank was merge to less than 10 and all NPL\Bad Debt was carefully manage. Companies weren't allowed to bust and government encourage White Knight rescue of troubled companies preventing massive layoff and affecting any downstream companies.

There were a lot of skepticism about Mahathir move to impose capital control but he prove us wrong.

That sounds a lot like what the Koreans did. Except for the IMF bit, obviously. Good job.

 

[somsak]

malaysia did the right thing. b

Malaysia went the opposite way during the 1997, instead of accepting IMF bailout, Malaysia imposed strict capital control following China footstep. Ringgit was pegged at RM3.80 while making selling ringgit very unattractive to any speculators. From 20+ bank was merge to less than 10 and all NPL\Bad Debt was carefully manage. Companies weren't allowed to bust and government encourage White Knight rescue of troubled companies preventing massive layoff and affecting any downstream companies.

There were a lot of skepticism about Mahathir move to impose capital control but he prove us wrong.

mLaysia did the right thing, Bankrupt was Long term capital management im glad that happened. Mahadeh was smart.

before 1997, Thailand and Malaysia was about the same GDP per capita. Long had gone those days since 1997. That proved who was right.

The point was not that hedge funds was unfair. The unfair adventage lies on the fact that hedge funds are closely related to FED. FED is actually association of banks with hierachical structure. These hedge funds are from those FED members bank. They heavily abuse power of US dollar as reserve currency status. It is unfair for FED to b able to print US dollar. Only gods money should be moeny for fair game.

 

[cirr]

The world would be a better place without a dominant currency。

Half of the so-called American power would be gone with the dollar losing its reserve currency status，which it must for the sake of fairness and general financial and economic stability。

 

[Nike]

The world would be a better place without a dominant currency。

Half of the so-called American power would be gone with the dollar losing its reserve currency status，which it must for the sake of fairness and general financial and economic stability。

we can't do that, the financial world need something to backing up all of the international transactions happened in this modern day and ages. If dollar lost their confidence the other currency must be filling the places or else we will see the collapse of financial institution around the world.

 

[Reashot Xigwin]

The world would be a better place without a dominant currency。

Half of the so-called American power would be gone with the dollar losing its reserve currency status，which it must for the sake of fairness and general financial and economic stability。

Bad idea that would cause an Economic catastrophe. Dollars today are like gold. A universal acceptable currency.

 

[somsak]

Im not against US dollar. I want US dollar that is convertible to gold in fixed price. not just seems like gold.

 

[Reashot Xigwin]

Im not against US dollar. I want US dollar that is convertible to gold in fixed price. not just seems like gold.

You're one of "those people" that want a gold based currency.

 

[Nike]

Im not against US dollar. I want US dollar that is convertible to gold in fixed price. not just seems like gold.

You must be taking a nap while Economic classes being teaches in your high school

Just googling and find then read your economic books once more and finding the chapter in which talking about Bretton Wood system and Nixon Shock, and why many states in this world using US dollar as their reserve currency including your own country and PRC.

John Maynard Keynes is the keyword here

 

[somsak]

You must be taking a nap while Economic classes being teaches in your high school

Just googling and find then read your economic books once more and finding the chapter in which talking about Bretton Wood system and Nixon Shock, and why many states in this world using US dollar as their reserve currency including your own country and PRC.

John Maynard Keynes is the keyword here

Economic is man made. Why do I need to believe Keynes. I believe Peter Schiff, can I?
Do u know Quantitative Easing? Do you think its fair when US got crisis, they can bail them out with money printing and exporting inflation while we can't?
US dollar was reserve currency in the first place because it was pegged with gold.
I don't understand why you are happy that some other country can cheat by printing wealth.