House of Cards

For the first time in a long, long, time , President Bush will have quite a few people to agree with him. Quite. I am of course referring to last night's congressional rejection of the USD 700 bn package. He had said that rejection is a doomsday scenario. At this moment, not too many writings have been devoted to the (potential) side effect to our economy, so allow me to sketch a few broadbrush ideas.

It is commonly known that despite talk of a "decoupling", the fact of the matter is that Asian economies are growing less than predicted. There is therefore a strong base to believe that our economy will be quite affected by this latest development.

Our exports to the U.S. would most likely be slowing down , impacting our trade balance. Remember that as late as August of this year, our own president had tabled a budget of Rp. 1,000 trillion. This reduction in export receipts will impact the government's spending plans, of which the main feature was the already earmarked 20 % for education. This maybe one of the first to be impacted.

Speaking about budget, it is useful to speak about the middle class' budget. Jakartans will notice the web of sky rise office buildings and apartments currently blanketing Jakarta's skies. As the economy slows down, money becomes scarce and banks , real estate companies are relying ever more on the monthly mortgage payments. So long as the people still have jobs, this is not an issue. However the moment unemployment picks up, the probability of failure to keep up with the mortgage payment becomes higher. Assuming the houses/apartments were reposessed and offload into the market, such act will depress the property markt and may result in a negative valuation for the remaining owners. Banks become even more depressed, funds to invest or to cover liabilities become even scarcer. Overnight rates shot up, the central bank might have to step in. Sound familiar so far ?

The major difference (I think) between our economy and those of Uncle Sam's is that our mortgage market aren't as influential. Quite a few couples still live with their parents. Irrational exuberance did not have too many card-carrying members. The other - potentially more lethal- difference is quite a few property investments are speculative in nature. Either it is not being occupied or it is leased. The jury is still out on the strength of the buy-to-lease market but employment of young professionals would be a key factor.

As can be ascertained , thus far, the silver lining has not appeared in the horizon. However, as one former Ambassador of the Court of St. James to the country memorably said, "Indonesia is a country for the optimistic pessimist". This pessimist would more than prefer to be proven wrong.

A Safer Exodus

Frequent readers of this newspaper would recall a recent article supporting the development of the Trans Java highway. Given the expected headlines in the newspapers about the oh so long time it takes to reach one's kampong during the Lebaran period, it seems more daft for the government not to shift construction to the fifth gear.

The case is strengthened by the serial unreliability of the alternative modus of road transport, especially that of the trains. Derailed trains, accidents involving the daredevil passengers sitting on top of the coaches are a common occurence. It is feared that as the train activities pick up, the incidents become more frequent.

Therefore if the government still doubts about the return on their investment of the highway, they should start with a good feeling that by doing so, they have saved the lives of their citizens. Should this not be sufficient, surely a moral bancruptcy has occured.

Return of a more hedonistic nature are obviously still can be expected. If you look at the developed highway system of Europe for example, where your correspondent is mildly acquainted with, hotels, amusement parks, theme parks, petrol stations , all sprang up like mushroom in the wet season. These bring investment which begets employment and tax revenues. These in turn create the multiplier effect in both the national and the local economies. At the same time it encourages entrepreneurs to be more innovative in adjusting to this new phenomenon and compete for customers. So everybody wins, right ?

But the biggest winner will be people like you and me. Our travels will be safer, more relaxing and - hopefully- will spawn an industry of local winnebagos / RVs !

The Rainbow Warriors

This time next week, Jakarta will be able to take a breath of fresh air resulting from a virtual absence of cars, pollution generator buses and Valentino Rossi wannabes motorcyclists. Alas this heavenly period only lasts for one week before the well-travelled permanent visitors headback to the nation's capital.

Anybody who was in Pondok Indah Mall tonight must have been wishing for an early Lebaran. The place was jammed with cars , bumper to bumper. It took as long to leave the underground parking lot as it does to travel from Kebayoran Lama to the mall itself. The heat and pollution underground was unbearable and I felt really sorry for the security team and the parking attendants who were still there and could not escape from the netherworlds.

Of course this being one of Saturday night plays a factor for this additional hot air but I wonder if the other reason is the showing of Laskar Pelangi, based on an acclaimed best seller about the travails of two idealistic teachers and their students in Belitong ("Biliton").

Your correspondent, generally speaking, is not a big fan of local movies. But I am making an exception for this wonderfuly touching movie. The story is well known therefore it is not repeated here.

All sorts of emotions came up. Childhood memories, emotional attachment and perhaps even social cohesion.

Childhood memories

Watching the movie brings back your correspondent's childhood memories of the situation around 1979. The products, newspapers, cars, music. Did anybody see the blue Datsun Pick up ?

Emotional attachment

The more emotionally accomplished might feel blessed that despite their problems living in Jakarta, all their whinings are nothing compared to the very basic needs of education that those very brave children in Belitong were fighting for.

It also reminds me of all my teachers from my SD years. I have lost touch of all of my SD friends and I wonder what happened to them. I am now 37 years old so it has been 25 years since the last time I saw them.

Social cohesion

But perhaps the real message of this narrative is further proof of Indonesian diversity and that Indonesians of all background can and should forget their differences and focus on how to make the most of it. The children are malays, chinese; moslem, mysticists and buddhists. And yet , despite the odds stacked against them, they blended into a solid, close and loyal team.

In preparation for the maelstrom of bad economic news from the US and the politics for the parliamentary and presidential elections of next year, this spirit would really come in handy inside each and everyone of us, Indonesians.