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Strategies & Market Trends : Asia Forum
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To: Thomas Haegin who wrote (557)1/8/1998 6:28:00 AM
From: tom  Read Replies (3) of 9980
 
Hi everyone,

I just thought I'd put in a post to let everyone know how bad things are in Indonesia. I haven't been out there since October 97 but I speak to people out there several times a day.

Fact 1: The quote on Reuters for the currency is completely misleading. There is no liquidity in the market as there is absolutley no demand for Rupiah. If you flew down to Jakarta you could get US$10bn worth of Rupiah at 20,000 Rp/US$.

Fact 2: Hyperinflation (ie +1000%) is almost certain as no one will trade in Rupiah as they don't know how much prices will change the next week. If they do trade in Rupiah then they will increase prices not by how much the Rupiah has fallen but by how much they think it will fall over the next week (+ a bit more for good luck). This leads to the classic hperinflationary spiral.

Fact 3: A debt moratorium is also very likely as they do not have any hard currency with which to pay back loans.

Fact 4: There will be some form of coup/marshall law and huge social unrest. This is due to the increase in unemployment, El Nino's destruction of the agricultural economy and the Indonesians getting pissed off that even when their country is going down the toilet the leadership still refuse to give up even a part of their enormous wealth by cutting back unnecessary projects to politically connected companies.

Sell all stocks and all currency and move out of the country

Thailand and the Phils will find it diffiult going in this scenario so I guess you should forget them too. Korea I think might actually make it as DJ Kim is acting like a proper leader, the US actually care what happens in Korea (unlike Indonesia where they couldn't give a damm) and the people seem to be pulling together
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