Sunday, December 27, 2009
Friday, December 25, 2009
Some quotes from Time (Bernanke's US Issue) that might as well be explaining Indonesia (ie, SMI-Boediono's rescue act and the noise that follows NOW)
"What we don't know is what the economy and our lives would look like if a few individuals had not acted on our behalf and had simply sat on their hands" (Stengel, "To Our Readers")
"Bank runs are even scarier now that they don't require an actual run on an actual bank. Billins of dollars can be withdrawn with a keystroke, and all sorts of nonbank players ar now dangerously intertwined with financial markets" (Grunwald, "Ben Bernanke")
"Now that the fire is out, it's easy to attack the firefighters for getting the furniture wet or holding their hoses improperly" (Grunwald, "Ben Bernanke")
"This wasn't a war of choice. It was a war of necessity" (Grunwald, quoting Tim Geithner, "Ben Bernanke")
"Bernanke has become a political victim of his apolitical success... It's now up to our dysfunctional political system to let him do his job -- and to fix the financial system so that he never has to save the world again" (Grunwald, "Ben Bernanke")
Thursday, December 24, 2009
For wonkish, go google Diamond-Dybvig model.
But let's make it easier. Some people seem to think "systemic risk" here means the bank is related to other banks and therefore can affect the latter in a contagious process. Maybe I'm wrong, but Burhanuddin Abdullah and Anwar Nasution seemed to use this concept in their hearing with DPR's Pansus. According to their logic, since BC is small, it couldn't have systemic risk whatsover.
Some others believe it is expectation that really matters. (I got that impression from for example Boediono's and Miranda Goeltom's responses to questions from DPR's Pansus). As a depositor in Bank A, you, a risk-averse person (and by the way, that's a fair generalization), would feel anxious when you see people run Bank B across the street. No matter how small Bank B is and no matter how unrelated Bank A and Bank B is. The only connection between the two banks is what we call human expectation, driven by the act of observing something that you then expect might happen to you, too. Your reaction can vary. If, by any chance, you have the information that general situation is manageable (eg there hasn't been any news about world struck by crisis or something; or any other relevant information), you might not withdraw your money from Bank A. Yet. But, in many cases, you can't have full information on whether or not the situation is "manageable". It can take only a couple of depositors loudly saying "Gee, that bank is falling! This bank is next, I'm gonna withdraw!". Before you know it, Bank A is rushed, too. Then Bank C, D, so forth. It is therefore "systemic". This latter situation is sometimes affected by your perception on the authority, in this case Bank Indonesia and MOF. When you know (or are told) that BI and MOF are short of liquidity and fiscal capacity to deal with a crisis, your incentive to quickly withdraw and save your money at home rather than bank increases. In other time, you think BI and MOF can handle the situation well (even if Bank B is rushed, their depositors are saved, etc), in which case, your incentive to withdraw is relatively small.
So, it's about expectation. I'm more persuaded by this second understanding about the word "systemic risk".
But I fully agree with State Minister for SOEs Mustafa Abubakar's remark: "The leader doesn't need just a technical capacity. It requires also leadership and good management capacity".
Tuesday, December 22, 2009
So de facto, we have had an increasing trade with China. Not just import, but also export.
Monday, December 21, 2009
But I can't understand why you should give an award to a petty thief. The legal system is weak, yes. Big thieves should be punished big time. But that doesn't mean you can just forgive small thieves. Because thief is thief, regardless of the scale of the theft.
A sympathy for an old woman who "were forced by situation to steal something almost worthless" might sound just. But giving her an award is I think just too much. You're sending a very wrong signal to the populace.
Sunday, December 20, 2009
And disrespecting the law and constitution is moral, gentlemen?