20 Februari 2009

IMPACT OF GLOBAL FINANCIAL CRISIS

Still Remember Monetary Crisis? I think that the old economic crisis the most severe ever experienced is my Asian monetary crisis in 1997 / 9. In fact the impact of the financial crisis Asia far less than the financial crisis that the world now. During the Asian monetary crisis, at least, there are 'safe heaven' or 'safe heaven' for the global investor, namely in the United States, Europe and Japan. Investors can sell the stock of debt and in Indonesia, Thailand and Korea (even though loss) in the crisis, and buy stock exchanges in New York and London. Now, the country was safe heaven to the severe economic crisis. Investors seek safe heaven difficulty to park their funds and, because the stock market, debt and the letter of all commodities go down, 'cash is king again.

How severe financial crisis of this world? There are benchmarks. Lehman Brothers, Bear Stearns, Merrill Lynch, AIG, Freddie Mac and Fannie Mae, the giant U.S. financial institutions, survived the recession the U.S. economy post-2001 terrorist attacks. They survived the world economic recession due to OPEC oil embargo of 1973 and survived the two world wars.

They also survived the world economic recession in 1930-an often called 'the great depression, "caused the financial crisis in the U.S. in 1929. However, they do not have survived the crisis subprime home purchase loans in the U.S. in 2007/2008. That is, some weakening of financial institutions in the world are indications that the economic problems the U.S. and the world is now far more serious from our previous estimate.

World in panic investors are getting worse. Free exchange of shares. Since early 2008, China's stock exchanges anjlok 57%, India 52%, Indonesia 41% (before discontinued operations for a while), and the European zone 37%. While the market weakness of debt, currency developing countries and weakened commodity prices down, especially after the oil commodities speculator rate that the economic recession will reduce energy consumption of the world.

In the U.S., after viewing the Wall Street stock exchanges continue melorot, Congress finally agreed to rescue the financial sector program (troubled asset recovery program-TARP) of U.S. $ 700 billion proposed by the government. However, because the length of political negotiations between the government and the Congress, investors disappointed to see politicians in Washington do not have a sense of crisis.

The capital market crisis (and share of debt) actually only affect global capital market investors. But the global banking crisis can affect the real sector economy of the world, including Indonesia. Basically, the U.S. banking sector is being weakened, lack of capital, and (the number of insolvent financial institutions) are reluctant to lend dollars, including to international banks in Europe and Asia. As a result, the lack of international banks to provide dollar loans to the entrepreneurs of the world, who need dollars to invest (for imported machinery, raw materials, and so forth), including in Indonesia.

Like it or not the U.S. dollar remains the currency in the core business. As a result, even though the interest rate the U.S. central bank (or the Fed Funds Target Rate) has been revealed to 1.5%, the interest rate London Inter-Bank Offer Rate (LIBOR), as the benchmark interest rate used by the economy, jumped sharply. This is the world's poor financial scenario: interruption of payment systems and credit of the global as the 'oxygen to breathe in the business world'. Central bank interest rates can be low, but interest rate loans for business, even if the loan can be, is very high because of fears banks lend their funds. Interruption is a global banking sector, not the stock market decline, which can actually stifle economic growth of the world slowly.

Finally, the central banks of the world understand how important exercise is coordinated. Seven central banks (including the U.S. Federal Reserve, European Central Bank, Bank of England and Bank of Canada) tribe cut interest rates 0.5%. This is the first time, the policy interest rate central bank carried out simultaneously in a large scale. Is this enough? Of course not. Policy coordinated central bank and the government the rest of the world should be addressed to meet three objectives. First, restore the banking system and the global payment paralyzed international funds so that circulation can be normal again - and the bank can loan.

Second, removing the problematic assets (especially debt letter Credit Financing subprime House) from the U.S. banking and banking capital increase to be more able to give credit in the amount that can support economic growth. Third, the world's central banks must continue to reduce the interest rate (interest rate to help ease the credit) and, more importantly, the government must increase the shopping for the development of the infrastructure and provide economic stimulus - because private investors are reluctant to invest in the liquidity crisis.

Whether the policy will be needed? The answer yes. What will be successful? 'Fifty-fifty', probably yes, probably not, because of global economic policies have not been done in history, but the risk of a recession the world economy that will be more severe if central banks and governments of the world does not do anything.

Impact in Indonesia

In fact (according to me) that its impact is felt most anjloknya oil prices, but why so why fuel prices in Indonesia have not been down in the waiting that's the case. But never mind, it all depends on the government because so many things to consider. The impact of economic recession the U.S. and Europe to Indonesia of course negative, but as net exports (exports less imports), only the approximately 8% of gross domestic product (GDP) of Indonesia, the impact is relatively small compared with the neighboring countries that export to the U.S. dependency of large, such as Hong Kong, Singapore, and Malaysia.

As in 2001/2002, or the last time a U.S. recession, there are three countries in Asia that do not hit economy: China, India, and Indonesia. The three countries have so many people shopping is a motorcycle community a strong economic stimulus. For the Indonesian economy, the negative impact of fuel price increase of 125% of oil in 2005 clearly greater than the impact on U.S. economic recession.

However, the global financial crisis and weak global banking system is very long will a negative impact on Indonesia, as the financing of investment activities in Indonesia (both by employers and in the overseas) will continue to shrink, the employment and consequently slowed the buying power-down which ultimately will reduce economic growth. Thus, it is very important for the world's central banks as soon as possible to restore the banking system of the world.

Impact of U.S.

This time I criticize the impact of the crisis of the United States Global themselves, deliberately this time for an article I just peel from the retail side because it was actually very much impact in all sectors, also named the Global Crisis, Global definitive impact. Just will not be exhausted if any posts I peeled in this time. Good news for those fond of a rich shopping abroad, flee to the United States as supermarkets and clothing boutiques in the country are set to slash the price drop in consumer purchasing power due to pressure of the financial crisis.

Like the monetary crisis that destroyed the South-East Asia in 1997, is a global financial crisis, to the day-to-day life of families in the United States, one of business clothing and living needs of residents in the State of uncle Sam. How not, every day the financial crisis worse each time it is also the greater pressure on the U.S. retail industry. Target, one of the U.S. claim to the service department, the buyers have a credit card that the average "over" credit.

On the other hand, the traffic of goods coming down drastically due to fear, not behavior that can not be repaid so that the manager of the store .. The U.S. consumer is usually suddenly stingy prefer to shop and save wealth in the home. Managers supermarkets and clothing boutique in the middle of the U.S. struggling to achieve happiness in the holiday period which usually take 20 percent of annual sales volume of all the shops in the U.S. clothing.

Just imagine, in the last three months, consumer spending is down to the lowest position since 1991 recession. News frightening throughout September from Lehman Brothers and bangkrutnya free fall due to financial market stimulus package U.S. $ 700 billion failed to stimulate the market, have been disciplines of the franchise at the same time reduce U.S. consumers' trust.

Similar situation occurs all over the country and if there is any benefit, then surely that of the retail sales value despite profits remain below Wall Street predictions. Wal-Mart reported record sales volume of almost the same as last year, Sam's Club grew 2.8 percent in September compared to same period last year, while Costco grown to 9 percent. Instead, sales volume markets from Kohl's department until nordstrom also sharply depressed at least over the last year, while health product franchise record sales volume with the same years ago. Dillard's, JCPenney and Saks even sinking to two digits.

Companies to U.S. retail really touches a lot of trouble, not only by the difficulty the company to buy goods because of damage to the stock market but also because of credit problems to get buyers. Financing companies such as Bernard Sands regular bridge the company's factory and retail have declined retail credit guarantee company for fear can not afford to pay retail. Even if any retail goods that can be purchased through the credit system, retail companies are still faced difficulties on the other, namely the low consumer purchasing power. In fact, just a note, the current consumption for this to be driving the U.S. economy.



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