Thursday, September 29, 2011

Market Failure Mechanisms Policies and Free Trade

Complete is the empirical evidence for the failure of political policies and market mechanisms are increasingly open international trade in the last ten years. To anticipate the return of the same events recur, the Government advised immediately implement a controlled market economy policy, taking into account the domestic economic interests and national security.

Symptoms of irregularities over the inability of market mechanisms over a perfect beginning to be felt as a wave of international business cycles, irregular writhing, among others, with increased volatility of oil prices above 100 U.S. dollars. Then the weirdness also recorded with rising international commodity prices like palm oil, minerals and agricultural goods, the demand by the actors on an international scale farmers money. They are all chasing the non-monetary commodities, because of the weakening U.S. dollar value of the currency is revered as a "benchmark" in the pattern of international exchange of goods and services. With the depreciation of the currency of U.S. dollars, international trade activities then lead to the poaching of merchandise, which are categorized as non-commodity meneter the "liquid" - replacing the role of currency is U.S. dollars. This incident has taken place so quickly, because it is assisted by the easiness of commodity futures markets and international efforts to mobilize funds for speculative purposes. Stock the coffers of international private funds is partly also spent on the products stocks and bonds in emerging markets.

Well, the story keudian be funny because by the temporary government policy makers, economic experts and proponents of free international trade in the homeland, the Indonesian capital market boom that occurred since the beginning of 2007 until early 2008, they regard as the main attraction of the existence of the power of the national economy of Indonesia. Though the disciples after sarjanapun (as in MMUI), will understand right that the incident heat influx of capital flows to the Jakarta Stock Exchange (JSE), which later changed its name to IDX, caused by lax regulation of the manager of BEI and the interest rate spread is the difference.

Automatic At that point, viewed from the perspective of economic concept of "Bath", Indonesia in the form of monetary reserves of foreign exchange increased many times over. Rupiahpun participate terkatrol which artificially causing the rupiah to strengthen its close to Ro 9200. But after a few months later observed, was an increase in stock market capitalization of BEI is not accompanied by an increase in installed capacity of our domestic production. There followed the so-called "bubble economy" in the capital market. That is, the actual emitenpun aware that an increasing number of common stock index is simply a mirage, that dream in broad daylight. Whenever this hot money that foreign investors were planted in the ground water, can they pull back. In conclusion, traffic money goes into the tub system of the Indonesian economy, has been used for the purpose of making money "capital gains" quickly. And this process is facilitated by the Exchange administrator for not doing its crackdown or a penalty cases where the stock was fried and commendable deeds of the "short selling".

Actually, the durability of the Indonesian economy since the rise in oil prices close to 140 U.S. dollar has begun to slacken. This is evidenced by the inability of governments to maintain oil subsidies. The structure of the state budget rose as though we too are actually saved by the issuance of debenture bonds currency of the Republic. Now if we remove the backup position this hot money from Bank Indonesia monetary balance, then our currency should weaken as oil prices increase it. Coupled with politics broke down over job padded central bank governor yesterday has slowed efforts to anticipate the possibility of flight of hot money from the Indonesian economy.

Exactly on this day we also mourn ... .. ISX closes shop for merchandise manager. Possible closure of shops was conducted on the basis of consideration of the possibility of the exchange rate melorotnya dramatically from large-scale attack the owners of foreign portfolio capital to withdraw their money. Well if this is true will tercorenglah image of the Government for its ability to run what is believed as: the "passage of a pure market mechanism in the homeland".

Learning what we can from all this?

Given the international liquidity of the money will be more stringent, and the world economy entered the crisis of the second half, then each developed and developing countries in the world will defend itself in the interests of their nationals respectively. The proof at the time the Government requested the United States Government assistance G7 to do the same thing, to save over the mobility of international finance as the lifeblood of free trade activity, was not entirely welcomed. Looking ahead, countries will increasingly make the policy of protectionism, while forgetting hibauan WTO body for gradual tariff reduction program. It is not time in a pure theory of International Trade applied in kacah globalization is increasingly fierce and greedy today.

For the Government of Indonesia, maybe this will be the agenda of the Cabinet of President-elect 2009, for the time to begin implementing the management mechanisms of capital markets and financial markets are controlled. All this is intended to allow the interests of shareholders and the domestic economy is not easily torn apart by the act of the owners of capital of the world. Protectionism for our commodity, the following protection for activities involving live hajad Small and Medium Enterprises need to get top priority. While the time we need a little hard to face behavior developed countries (in the agreements at the international level) that harm the domestic economy.

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