Singapore's outlook vis-a-vis indonesia: Economically, for electronics, the impact is not significant as Indonesia is not a major buyer of Singapore's electronics goods. However, quite a lot of electronics mfg is done in Indonesia (which have benefited tremendously from the depreciation of the rupiah). So far the locations of Singapore's factories in Indonesia have been spared most of the riots (mostly on Batam and Bintan islands).
However, the links in other sectors are greater. All banks have exposure there, and many Indonesian elites use Singapore banks. Practically all these loans can be written off. Still the net exposure is as a percentage of total assets is not great (someone dig up the article in the papers please).
The greatest link is socio/political. Many Indonesians work in Singapore as labourers (legal and illegal). Indonesia is also the largest country in the region. And don't forget the forest fires. Instability in Indonesia makes the whole region shaky, which in turn causes currencies to slide, helped along by hedge funds (markets are easy prey here as they're relatively underdeveloped due to "protective" governments). Stocks go the same way.
The of course the whole thing reverberates all the way around the world, causing concern even in Goldilocks-economy USA. Consumers could ultimately get worried, and think they can save themselves by spending less on things like electronics, and voila, the circle is complete - vicious and self-fulfilling.
When you have funds as big as central banks on one side, inexperienced bankers on the other, and a bumbling IMF in the middle the result is predictably profits for the funds, poverty for the bankers, and blood on the IMF's hands.
The US government must step in to stop this. i don't think there is any other way. No need to argue about efficient markets - no such thing here. |
