Here Thar Be Monsters!

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Ekonomi Dan Kerobohan

 UPDATE: As yet another example of silly things to worry about, given the much more serious economic problems, a bunch of religious fundamentalists with too much time on the their hands have decided to protest the Miss World contest, for which the contestants are already arriving.  That's's been planned for at least two years, involves multiple venues over two weeks, and these yutzes are just getting around to protesting the fact that the contestants won't be wearing bikinis.  Yes, you read that right.  If you look at the article, you can tell by the picture that the protesters know they're a bunch of yutzes, because they covered their faces so their friends wouldn't laugh at them.  Sheesh!  What's worse are the complete and utter nincompoops in government that are holding hearings over an event that has already been approved and licenses for at least a year and now the crowds are showing up.  At the very best, this circus is to elicit bribes from the producers to ensure things go on as planned.  If I were the KPK, I'd be watching the bank accounts of every government blow-hard involved in the debate.

Sudden impacts with reality are seldom pleasant.  If usually involves folks who have been living in a dream world rapidly coming to grips with the murky fantasy they've been living in.

Such appears to the be case in Indonesia as we speak. The country has been on a boom unlike anything in its history.  Though the late 80s and early 90s were high times, the economic benefit was not as widely spread across socio-economic levels as it is today.

The current boom has been fueled in part by the massive Chinese expansion and great gobs of foreign investment money created by the Western bailouts in 2008.  The fire was further fueled by low interest rates and prices domestically.  But the music shows all the signs of stopping and the musicians are looking a bit tired and ready to take a smoke break.

Among the many reasons I chose to move to Indonesia was the speculation that this country, and the whole region, were about to boom, and I wanted some.  I haven't been disappointed.  And I'm not alone.  Western companies, languishing in sloggy economies back home, have been buzzing around Indonesia for nearly a decade now, pouncing on any vague opportunity that came along.  And therein lies the problem.

The combination of loose money and Indonesia's long cultural tradition of corruption combined to make a lot of folks rich, but as money supplies have tightened up and speculators have become quite a bit more skittery, the mire of Indonesian business practices have chased a lot of the easy money away.

Here's an example: in an effort to encourage growth in various regions of the country, the central government gave the provinces a lot of autonomy in allocating mining concessions.  As a consequence, there was a great deal of confusion (must intentional) over who would issue and benefit from licenses.  Every village, county and provincial government got in on the act, with dozens of overlapping claims on any given concession.  As a consequence, lawsuits started flying and many foreign interests, having gotten burned since the courts invariably decide in favor of local folks, have been leaving the country in droves.

This hase the double whammy of draining foreign cash out of the system, and shutting down hospital, school and other social projects that are typically part of deals made with outside operators.  The flight of foreign currency in turn has caused a crisis of confidence in Indonesian bonds sending rates steeply up and making it expensive for the central government to maintain the debt, which in turn sucks more money out of the economy.

Combine the above with the recent end to the subsidized fuel system, which has been in place since the days when Indonesia was a member of OPEC and a net exporter of oil and gas.  A combination of drying up old fields, insane one-sided policy and endemic corruption have all but shut down new development and production, leaving Indonesia a net importer or oil now.

Ceasing the fuel subsidy only two months ago has sent the price of everything through the roof.  From cab fares to food prices, everything has suddenly become much more expensive, with double-digit inflation on the horizon.  The only immediate action the central bank can take is to raise rates, which it has done, and which is further slamming the brakes on the economy.

While it's not entirely undesirable to cool off the economy, which has been growing at 6%+ for the past five years, having it happen all at once could send the whole country into a tail-spin.  All the loose money slopping around has caused a number of bubbles in things like housing and designer clothes and other useless stuff.  Folks, flush with easy money, have been turning into lite Americans, buying electronics and gee-gaws like they are going out of style, rather than saving and deploying money wisely.

The wildly expanding middle class here is now populated with folks who have four cars, two tablet computers, a half-dozen cell phones, 37 pairs of shoes, and three armoirs full of clothes they never wear.  Furthermore, everyone's become a real estate magnate, buying and flipping houses and apartments as a hobby at the breakfast table.

And that brings us to the crux of the problem: consumerism.

Consumerism is a pointless and empty pursuit.  A company puts out a product, saturates the market, prices run up wildly and then crash, and then some new product comes along.  Do this enough times with enough products and eventually the entire economy collapses - from sheer exhaustion if nothing else.  Everyone has bought all the crap they can store and prices have run up as high as anyone will pay.  All the new iCrap and BoobBerries can't pry open pockets.  Crash and burn.

Emerging economy appears to be just a polite way of saying a new group of suckers.  As fast as the corporate masters can heat up an economy, they launch the same old tired game: dangle gee-gaws and what-nots in front a people and get them to chase the carrot round and round until everyone just collapses.  By then, the greedy bastards have moved on to the next playground.

Every time, people are led in orgies of consumption until the Board Members pull their money off the table - right at the peak or greed and corruption.  Areas where the puppet-masters are just starting their work are called 'emerging economies'.  Areas that have been led round the consumption barn repeatedly are called 'mature or developed economies'.

They come into an economy where people buy a home for life, and mom can stay home with the kids, and life is simple and affordable.  When they are finished, everything is polluted, families are tapped out and both parents have to work just to pay the debt, as they sit amongst a pile of gee-gaws that no longer have novelty or usefulness.  Neighbors have been turned against each other as they competed to out-do each other with their toys.

Maybe, just maybe, in the coming train wreck that we will call the global economy, folks will learn that pointless consumerism is an economic dead-end that only empowers and enriches the 1%.  To them, we are nothing but rats in a maze, chasing imaginary cheese until we fall over from exhaustion.

Have Indonesians really received a higher standard of living?  Or have they traded a quiet and idyllic life for clogged cities, smog-choked skies and piles of garbage?  Have all the gee-gaws and what-nots actually improved life?  Or have they only made us more neurotic and selfish?

The question remains can Indonesia turn itself around?  Can government and the people control their impulse to slide the knife between the 4th and 5th vertebrae to get an inch further than the next guy?  Can people pull themselves back from the precipice from which the West has jumped like so many lemmings?  Is it really necessary to buy just one more iFad or car or what-not?  Can we resist the urge to shackle ourselves with debt for the appearance of wealth and success?

It was just 15 short years ago that Indonesia fell into a dark moment of history, with riots, destruction and killing in the name of having more stuff.  It's important to remember that kind of behavior provides entertainment for the Money Masters who play us like so many rag dolls.

Is it too much to ask for a little restraint before we all leap into the Abyss?