This blog was empty for almost two months. Some notes on issues that have taken attention are summarized below. I will try to come back to this blog again for the next days.
1. Notes on US Recession
Krugman (like always) and Greenspan seems agree that US economy is facing recession now. They sometimes blame Bush for the recession [and of course Bush will blame the terrorists]. The other opinion (If I am not mistaken) was from Ms. Friedman who blames Greenspan, because at the time of Greenspan as the Fed Chairman, the expansion monetary policy has taken role in pushing credit expansion that taking stock nowadays. This problem seems almost the same with Indonesia problem that create moral hazard before the crises in 1998. I think for nowadays, the Bush administration will fight for facing the recession by using both fiscal and monetary expansion. It means that the real problem will be faced after the presidential election when the inflation takes place in the economy. The inflation problem as the result of both from supply (especially of the high oil price) and monetary side (the Fed expansion). After the presidential election, both the fiscal and monetary will apply the contraction policy. Then the real recession probably will start around the end of this year if the economic management could not face the challenges.
2. Notes on US Presidential Election
If the US economy condition worse, there is a possibility that the candidate from Democrat will win the election, either Ms.Clinton or Mr.Obama. Unfortunately, the chance is not as big as the press shows us. There are two reasons for this: first, since the US independent, there is no US president from either women or black; second, nowadays the right wing (similar with the rising of Partai Keadilan Sejahtera (PKS) phenomenon in Indonesia) in US domestic politic has taken big roles in US politic that make Republican win the election after the Mr.Clinton era. However, if Ms. Clinton or Obama were winning the election, the US politic will initiate a new history in the world of democracy that either women or minority could lead the biggest democratic country in the world.
3. Notes on the Impact of US Recession
If the US economy recession were coming, the whole world will suffer, including China, one of the emerging economies. China will suffer both from the high oil price and the export demand from US. China will reduce its economic expansion that means will cut some imported input, such as from Indonesia for example. The Indonesian economy will also suffer from the downturn of US demand. This effect will probably take effect by the next year.
4. Notes on Suharto Funeral
Like it or not, Suharto was a great man for his time both for good and bad reasons. I have no personal relation with him, but I have some notes as the neutral perspectives based on my knowledge and information that I have. First, some of his economic policy has taken a big role in developing Indonesia from the lower/poor country into the middle income country. Two main good policies were the population control and education infrastructure through INPRES. Second, some of his political decisions repressed some groups in the past as the costs for its political stability, as his main concern. This becomes his biggest weaknesses until nowadays that invented political problems that seems become endless problems in this country. Third, because his time in power was too long (32 years), it created huge interest group that got advantages from his power. And the old wisdom word took action “power tends to corrupt, absolute power corrupt absolutely”. Unfortunately, the interest groups that took advantages from his power were range from politicians, tycoons, administrators, civil organizations, military personals, and others. It means that there were so many persons or groups who got advantages from his power. Some of them at the end of his power, when all problems were blamed to him, turned against him. It just the repetition of the old history of mankind.
5. Notes on Indonesian economic condition nowadays
Despite the problems of the external shocks, it seems that 2008 economy should be better than the year 2007 from the growth perspective with the cost of inflation. Indonesia also has applied the expansion policy both from fiscal and monetary in facing the next election. In financing the fiscal expansion, probably the government will squeeze the oil subsidy as one of the source of fund. This policy will face dilemma for Yudhoyono administration both from economic and political perspectives if he still want to race in the next election.
