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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: Michael who wrote (7990)	3/2/1998 12:12:00 AM
From: philv	Read Replies (1) \| Respond to of 116834

It might work. Worked for the dollar didn't it? Backed by the credit worthiness and assets of the country! Sounds good anyway. It is all a confidence game (charade) isn't it? Phil

To: Michael who wrote (7990)	3/2/1998 9:13:00 AM
From: Bucky Katt	Read Replies (3) \| Respond to of 116834

More>>Indonesia Faces Hyper-Inflation JAKARTA - Indonesia admitted Monday that inflation had hit its worst level since the mid-1960s turmoil that toppled founding father Sukarno and propelled the now ageing President Suharto to power. Figures showing this nation of 200 million people on the brink of hyper-inflation were issued as U.S. presidential envoy Walter Mondale flew into Jakarta with what was expected to be a blunt warning to Suharto - implement economic reforms or face the consequences. Suharto, who said on Sunday the current crisis had begun to compromise the economic lifeline of the world's fourth most populous country, also faced other problems from an unexpected quarter. One legislator at the normally docile People's Consultative Assembly (MPR), the country's top policy-making body, suggested the 76-year-old former army general step down if the crisis was not speedily resolved. Others spoke of a deadline to sort out the mess. The MPR is expected to re-elect Suharto unopposed for a seventh five-year term next week. The government's Bureau of Statistics said inflation in February was 12.76 percent, more than in all of 1997. According to calculations by Reuters, the year-on-year figure for the month was 31.7 percent, close to hyper-inflation. "The classic definition of hyper-inflation is too much money chasing too few goods and that appears to be the situation now,'' said Neil Saker, head of regional economic research at SocGen-Crosby in Singapore. It is the highest monthly inflation in Indonesia since the mid-1960s, when widespread economic turmoil led to what the government has called an abortive Communist coup against founding president Sukarno. Historians say inflation was about 500 percent at that time as the country's social, economic and political foundations collapsed. Suharto took power after crushing the coup and within two years had pushed Sukarno out of the presidency. At least half a million people were killed in anti-Communist pogroms after the coup attempt. Since then, Suharto has de-politicized the country and built his presidential career on stability and economic development - both now under threat. Fears that Indonesia, strategically poised on major sea routes linking East and West and the world's largest natural gas producer, may be on the brink of widespread unrest have sparked concern in many of the world's capitals. Angered by rising food prices, mobs looted and burned shops last month in at least two dozen towns across this country of 17,500 islands, which stretches for 3,000 miles along the Equator. Against this background of mounting concern, a steady stream of high-level visitors has descended on Jakarta in recent weeks to cajole, advise or scold Suharto. Former U.S. vice president Mondale, sent to Jakarta by President Clinton, will meet Suharto on Tuesday, U.S. embassy officials said. Stressing he was on a sensitive mission, they gave no other details. A Clinton administration official, who asked not to be identified, said on Friday that if Indonesia did not embark on economic reforms, the United States would oppose release of the next instalment of funds from the International Monetary Fund bail-out package of around $40 billion. Suharto said on Sunday he was committed to reforms agreed with the IMF but was looking for additional measures to restore confidence in the economy, including perhaps a currency board system to fix the rupiah to a single rate. That mechanism is opposed by the IMF, as well as many Western nations that contributed to the bail-out package, until Indonesia is in a position to ensure its success. They say Indonesia's banking system is too weak and its foreign exchange reserves too limited to fend off an inevitable attack on a fixed rate. A central bank announcement that Indonesia's gross foreign reserves fell to $16.33 billion at the end of February from $19.06 billion a month previously makes the country's ability to back a currency board even more onerous. Markets however took a more benign view of the situation. Economic analysts said Suharto's "IMF-plus'' plan, which would add the currency board proposal and other unspecified restructuring to the IMF package, had at least stabilized the rupiah at current levels of around 9,000 to the dollar. "IMF-plus is enough to keep things going,'' said Chris Tinker, regional head of economics and debt research at ING-Barings in Hong Kong. "It will be enough to stop heavy selling of the rupiah without really committing to doing very much more.'' But at 9,000, the rupiah is down over 70 percent from its July level and the plunge is a key element in the downfall of Indonesia's economy. Most local companies, burdened by billions of dollars in overseas debt, are technically bankrupt at that level. When they begin to close down, massive unemployment will add to the country's woes - and to the unrest.