Global Voices Online

Americans are afraid of another Great Depression as the Wall Street crisis continues to worsen. Meanwhile, many Indonesians are afraid that the 1997 Asian Financial Crisis will happen again if the U.S. economy continues to deteriorate. Indonesia was badly hit during the 1997 economic crisis. Many people can still remember the huge negative impact of the regional recession a decade ago.

Indonesia is Southeast Asia’s biggest economy. But it is also facing tremendous economic challenges. Poverty is rising, unemployment is high, and unrest is mounting.

What are the views of Indonesian bloggers and residents on the Wall Street crash?

First, a background on the Indonesian economy. Indonesia Project writes:

“Indonesia’s inflation rate is now well over twice as high as the central bank’s target of about five per cent. There are two convenient scapegoats: big increases in both oil and rice prices. But the real explanation, as always, is unduly loose monetary policy.”

The Polar Bear Diaries is not optimistic about the status of Indonesia’s economy:

“Indonesia survives by exporting produce from its large workforce. Local market purchasing power is limited. A large percentage of the population live from hand to mouth, with little or no savings. But those exports are falling compared to imports, and the general cost of living is rising dramatically. Exports will fall a lot further as consumer confidence in the West is eroded.”

The Wall Street crash had an immediate impact on Indonesia’s economy. Everything Indonesia reports:

“Indonesia's composite index fell around 10% in a single day Monday, the kind of drop that would have American market commentators running for their bottles of Maalox…Contracting economies means less energy consumption which means Indonesian commodity concerns, like coal companies, get hammered.”

Indonesian banks suffered too which pushed some local investors to seek government assistance. Exegesis disapproves this kind of behavior:

“Have you read newspapers lately? I'm talking about those people trying to ask compensation from the government for their investment loss due to the crippling effect from the Wall Street's recent fiasco. They are amazing. When they decided to put their money in private investment bank, they did it out of respectable greed and of course without consulting any government whatsoever (in fact it's really like: hey this is my money, you government stay away!). Now the bank they put their money with is facing serious problem and is likely to share the pain with their individual ‘investors'. And they're asking the government to pay for their loss? I don't get it. I really don't.”

Meanwhile, Id economy shares the government's optimism:

“I fully agree with government about the current condition, we're still good to go but we should anticipate for contagion effect, in this case by fighting liquidity squish both for domestic currency (by limiting credit expansion) and foreign currency (by promoting export).”

The public is advised not to panic:

“If you ask me what next, to be honest I do not know. Since that's all depends on the market now. Depends on the result of maintaining current account we will see up and down in rupiah's exchange rate that's for sure. And depends on the credit growth reform we will see (in my opinion) slowdown in economic growth. But how the swing up and down is completely up to the market to decide. Yes, please play safe these days, there are panic people out there, and it is a bliss and bless for us not to be panic (now).”

treespotter hopes the situation in the US will improve:

“I am not an American but I have financial interests to see the market go back to where it was (if possible, circa 2005). Similar to America, I’m up to my neck in debt and survive only on steeply declining asset and a line of credit. I don’t get to vote for American president and I don’t have a representative to call. I get to watch the whole thing from television and the internet, and I truly wonder if anyone there really knows what they’re doing. I sincerely hope so.”

Cafe Salemba supports the bailout program of the US government:

“You may agree or disagree with the plan, but I think it is imperative to at least understand that this is about how to deal with credit market, the heart of the economy that keeps its lifeblood flowing, that doesn't work. One lesson from the 1930 Great Depression and 1998 Asian Crisis is that the failure to do so will bring a prolonged credit crunch and output contraction. It could become indeed very nasty.”

The threat of economic recession is affecting personal perspectives. Java Jive writes:

“It’s October, so it must be that time of year when I freak out about the future, to stay in Indonesia or not, to seek another career option, or simply maintain what I’ve been doing for so long now. It doesn’t help that the American economy has been thrown in the canal, nor that the Indonesian economy is now heading towards possible turmoil as well.”

Indonesia Matters discusses the prospect of making the sharia finance as alternative to the US economic and banking model. A lively discussion in the comments section ensues:

Andy notes how the West managed to survive economic recessions in the past:

“Whatever happens in the west now I don’t believe will be as bad as 1987 and certainly not as bad as 1929. And from both cases the west returned stronger than ever before. Compare that to now where Indonesia still hasn’t recovered from 1998 even though ten years have passed.”

Marisa points out the need to reform the US financial sector:

“How does USA’s financial crisis affect Indonesia, anyhow? According to Faisal Basri on last night’s news, it has not greatly affected Indonesia, because Indonesia hasn’t reached that certain economic depth with the US that would make it as affected as, for instance, Australia. Oh wow, apparently Indonesia isn’t so westernized after all, we just look westernized.

“While our Asian third world brains are beginning to question the worthiness of our loyalty to the Great White Hope — vice versa, America must endure whatever it is they need to endure…I do absolutely agree that American financial sector must reform itself, especially after Bush administration and the way its doing things.”

Unspun questions the imprecise reporting of Indonesian newspapers about the financial crisis. Via Twitter, vmahmud writes: “…is now seeking tweets from the U.S. Stock Exchange. Everyone have their parachutes ready?”