I am quite sure many are unaware why Malaysia choose to peg 4MR to 1 USD or the HKD 7+ to 1 USD.
When you peg your currency to a certain currency, the whole economy will come to a standstill. Very little growth.
Before when MR was fluctuating, they were developing at a very fast pace. The moment after Soros came in with his investment scam, backed by some heavy stuffs, and sabotage the Asian economy, Malaysia’s development completely stopped.
SGD did not budge or attempt to pegged their currency. Why? Fundamental Foundation of the country’s economic structure.
So much for the peg.
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PEG is the stupid way....
but some champion mahathir and daim for the peg..........but you can see the nation's development completely stopped and in trouble, too!
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Open up several foreign accounts in different countries not US dollars. The lower the USD dollars goes the worst the rupiahs become. Because rupiahs is relying too much on the dollar. The more USD you buy the high it goes then you need more rupiahs to buy the dollar.
rupiah will be in trouble???
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TheWrathOfGrapes Says:
November 7th, 2008 at 3:56 pm
If anything, i hope the authorties will clamp down hard on those speculating on currencies and commodities. It is very difficult to do any actual business projections as all tnd to bounce like yo-yos.
Before the Asian Financial Crisis, Bank Negara Malaysia was the biggest culprit sepculating in the currency and commodity markets. They tried to corner the tin market. Speculated against the pound and lost billions. Guess who was on the other side? None other than George Soros. Which was why Mahathir hated Soros so much and blamed him for the Asian Financial Crisis. The Bank of England warned BNM against forex speculation by a central bank against puny individual investors, and BNM had the cheek and gall to reply that they were only engaging in “active reserve management”.
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Bank Negara Malaysia should be put in world radar ....as it is a very dusty and dirty, dirty player !
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sputjam Says:
November 14th, 2008 at 10:55 am
I believe bank Negara malaysia speculated on the british pound when they lost to soros. As for the tin market, they tried and failed to corner the market. The guy who messed up on the pound speculation is now the deputy fianance minister of Malaysia.
This is more proof that, not only in america, but emeging economies also reward the dastardly.
The same deputy finance minister has now set up a similar fund to singapore”s GIC (govenrment investment corporation) and have invested heavily in indonesia, including banks and telcos.
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Personally I would like Indonesia to pursue closer ties with Venezuela, Brazil, Argentina and Chile- it appears Brazil is going to be the next big thing after the China hype dies down or the Communists get too proud/ foolish and become militarily strident.
Sputjam:
If the 1998 crisis proves anything it was the opinion of most conservative financial advisors that Indonesian bank system was rotten and oversupplied with too many over leveraged, very marginally competent private banks who keenly indulged in speculative trading to meet their fraudulent loans.
Very few have emerged intact- all have been full or part sold off or cross-owned and those that remain are keenly supervised within the board room- this is why Lippo and other crappy ones are essentially extinct never to revive.
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sputjam Says:
November 18th, 2008 at 12:06 pm
Govenrments should not indulge in business activities, but regulate them. Havng entities like singapore’s temasek or GIC will kill competition locally.
If Malaysia is taken as an example, infrstructure built by private enteprise, which failed have to be taken over by the govenrment, while those that proper, kept the money all to themselves(minus taxes).
More micro businesses should be encouraged in the rural Indonesian areas, such as banks, TV/radio stations, telcos managed by local communities and diversify and provide jobs.
The transjava highway should have been built decades ago, together with parallel rail links. The proposal to build the java-sumtra bridge by a chinese conglomerate should have been accepted. All these cost money. But these project benefits to local economy so much more, helps to redistribute wealth from jakarta to countryside. All these cost can be colected in the form of taxes and selling govenrment bonds, payable in the form of tolls and tickets collected in the future. Now with the financial bust, this will be the best time to start infrstructure spending as cost of raw material have collapsed.
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dragonwall Says:
November 18th, 2008 at 11:27 pm
I think the intepretation of
will kill competition locally
is being blown out of proportion.
How you compare a huge fund from a country be in competition with locals? And they are referring to foreign investments, not Indonesian.
So I suppose when the Indonesian government invested in let say a bank in Switzerland or Israel, they will kill the Indonesian money market?
Singapore invested in Indonesia’s communication project, have they killed the Singapore market or Indonesian market? The answer is no! or rather they are actually complimenting the topic at large. Why. Expansion, new products and service.
I failed to see your point on why Indonesian government should not have an investment arm.
Every one seemed to have a good laguh when the last time I said the rupiah will hit 12,000. Have they not? It already has. My forecast by 2016 came in much earlier had shown signs of feeble and an even worst Indonesian econmy forthcoming.
I also said if the BI cuts back on interest rate it will casue the economy to dip even further, Was I right? Yes it did because the first victim is the Rupiahs? Why. Capital flights seeking foreign currency? Lack of investment attraction. No one comes in but many going out of Indonesia.
How could an economy survive with no money coming in but mostly fleeing the country for fear of an even worst economic dilemna.
In the next two years, if the economy is not contained in within a reasonable scope of allowing the government to adjust the hyperinflation, you can even see rupiahs reaching between 13,500 to 14,500 before the 15,000 marker.
By that time if the Indonesian government does not take any offensive stance then the country will come to chaos again. This time it will not be the Chinese but governmental.
No one can convince the government unless there is someone that can drive the message through.
People like Aulia Pohan, Sri Mulyani, Miranda Goeltom, none of them actually help.
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yes, looking back......
http://www.indonesiamatters.com/397/credit-crisis/
some viewpoints are out-dated but can be a lesson for all, especially China shall learn from the asia financial crisis........
it so near and no one know when it comes........
