Thursday, October 9, 2008

US financial crisis whacks Indonesia

AP reports that Indonesia's stock market experienced a 10% drop in a matter of hours Wednesday. It's market is closed Thursday, and may not reopen for trading Friday.

The sharp fall was "attributed the sharp fall to selling by major foreign investors":

"What is happening is panic selling to an extent that it is irrational," said Irvin Patmadiwiria, the head of investments at PT Lautan Dana Investment Management.

He said roughly 70 percent of stocks traded in Jakarta are owned by foreign investors, who are cashing out holdings to create liquidity.

Among the most active sellers were Merrill Lynch, United Overseas Bank, McGuire and JP Morgan, he said. They were dumping blue chip telecommunication, banking, and manufacturing shares.

Unchecked, this financial crisis could mean political instability for Indonesia, and simmering ethnic tensions could once again boil over as they did in 1997.

Back when I took these photos in Jakarta on May Day 2008 (post), a number of Indonesians I spoke to at the rally were blaming the Americans for unwelcome economic policies. The Indonesian government had passed a law that made it easier for firms to retain workers as part-time contractors -- for up to two years. This policy may have made Indonesia more "competitive," but it left Indonesian workers feeling insecure.

Mark my words: the USA is not going to be particularly well-regarded in Asia by the time this financial crisis is through. The wounds from the 1997 crisis and the IMF intervention have barely healed.


  1. "not well regarded"?

    only if to put it softly !

    and is that at all surprising, or anything new?

    another point is: US deserves to be "not well regarded" ! watch some videos (on youtube) by Max Keiser ! he bluntly says that Bernanke & Paulson are "financial terrorists" who RUINED the whole world's economy !

    the BASTARDS !!!
    they've screwed up not only US and american folks - but they've screwed up the whole world ! and worse - they are getting away with it !

    so, "not well regarded" - is a very mild and compassionate attitude. for what US bankers and their buddies in government have done - it might be not surprising if some really pissed off dudes try to do something more than "regard [US] not well" - and who can blame them ?

    "Financial terrorists"

    Worldwide Financial Fiasco

  2. Classics :

    "they're financial terrorists, they stink...
    they should be strung up and flogged!"

    "dollar now is a leper still with most fingers..."

    "that's not a democracy, that's not capitalism - that's financial FASCISM !"

    "America.....1776 to 2000. Rest in peace.
    It's over, Stick a fork in it, it's done"

    -Max Keiser.

  3. I'm glad someone picked up on my intentional understatement there.

    ...and is that at all surprising, or anything new?

    When was the last time a major global crisis was so undeniably the fault of just one country? That makes this crisis extraordinary. There is no scapegoat.

  4. Americans may not see the crisis as "America's fault." Most Americans no doubt see themselves as victims: they see the crisis as "Wall Street's fault." Maybe as "Washington's fault."

    But these distinctions won't matter so much to people living overseas.


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