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Well, I live in India and it's quite similar to Indonesia (have traveled to Indonesia before..) in the ways that you mention. Many people in India operate unde

by ashray 13y ago

Well, I live in India and it's quite similar to Indonesia (have traveled to Indonesia before..) in the ways that you mention. Many people in India operate under the same principles, small privately owned and financed businesses. However, the big banks do indeed deal with the major corporations. At this point of time, the reserve bank of India has published a report stating that the failure of ONE major corporation will prove catastrophic for our economy. [1] Sounds absolutely crazy but it seems to be true. This is because banks have over extended credit (once more ?) and maintain very low liquidity. If one of their debtors defaults, the bank will be finished, thereby unleashing a domino effect on their creditors and debtors.. crash and burn. Add to this, the fact that the country runs on a major current account deficit (export/import imbalance) means that the government will not be able to do any massive bailouts. The foreign exchange reserves in the country are still small. Which means, we can't print more currency to hack our way out of the problem either because we'll see hyperinflation in a very bad way. Of course, the regular joe here will be able to find a way to continue running his business because he may not have a big relationship with a big bank. But macroscopic factors like big banks failing and the economy collapsing will hit him and everyone else hard as well. There will be massive layoffs for folks who work in big corporations and while in absolute percentages of population this may not look like much, it'll still impact a few hundred million people easily in a country like India. TLDR; Banks in India need to be reigned in, otherwise things are going to get very ugly sometime soon. [1] - http://www.moneycontrol.com/news/economy/rbis-financial-stability-report-is-devilthe-details_1016722.html http://www.moneycontrol.com/news/economy/rbis-financial-stab...

einhverfr 13y ago
Keeping it in perspective though, the 2006-2008 crisis had our banks eating up, over three years, an entire year's worth of GDP in government bailouts (including secret federal reserve bailouts). And that was damage reduction. I am not saying things would not be bad if, say, BCA and similar banks were to collapse here in Indonesia. If they did, the corporate world here (including the toll roads) would be sorely hurt. And people would lose savings. And much more. However, there are catastrophes and there are catastrophes. I am hard pressed to imagine a case where the results would be worse than the 2006 crisis in the US.

by ashray 13y ago

einhverfr 13y ago

Keeping it in perspective though, the 2006-2008 crisis had our banks eating up, over three years, an entire year's worth of GDP in government bailouts (including secret federal reserve bailouts). And that was damage reduction. I am not saying things would not be bad if, say, BCA and similar banks were to collapse here in Indonesia. If they did, the corporate world here (including the toll roads) would be sorely hurt. And people would lose savings. And much more. However, there are catastrophes and there are catastrophes. I am hard pressed to imagine a case where the results would be worse than the 2006 crisis in the US.