[Membiarkan seorang diktator seperti Suharto terlalu lama menyebabkan Indonesia dilanda huru-hara politik dan ekonomi yang amat perit tanpa ada sesiapa dapat membaikinya dengan segera. Suharto telah mewariskan satu kemusnahan yang menggila buat Indonesia. Beliau sengaja meninggalkan satu vakum kekosongan kuasa tanpa ada satu alternatif mudah untuk membaikinya (melainkan dengan kejahatan juga??). Sudah tentu rakyatlah yang akan menjadi mangsa malapetaka. Begitu jualah dengan diktator Malaysia yang hampir serupa.

Rencana DeRosa yang kedua mengisahkan sikap pelabur terhadap rancangan Greenspan itulah punca kelam-kabut jadinya. Di sini ketelitian fakta memainkan peranan - bukannya reaksi spontan yang kerap membuat ramai tertipu kearah mana ekonomi sedang berjuaian. - Editor]

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05/16 00:12

Indonesia's President Wahid Fights Fire With Fire:

By David DeRosa

New Canaan, Connecticut, May 16 (Bloomberg) -- What kind of way is this for the president of Indonesia, leader of the world's fourth-most populous country, to behave? While his opponents prepare to impeach him for financial improprieties and messing with international relief funds, Abdurrahman Wahid declares, in so many words, I dare you to impeach me!

Most likely, no one in Indonesia is surprised at their fire- breathing president's antics. He not only dared them to impeach him, he added that if he is impeached, he will immediately launch a ``direct personal campaign'' -- presumably to be re-elected president.

What's more, Wahid predicts that his impeachment would trigger a declaration of independence by at least five, maybe six provinces. ``Apres moi, le deluge,'' as Louis XIV was wont to remark at Versailles.

Wahid is under two motions of censure from parliament. He stands accused of misusing $6.2 million in state money that was supposed to buy food for the poor. He has until the end of May to answer charges but has publicly stated that he has no intention of gracing these accusations with an answer.

Pity The Country

So where does this leave Indonesia? In the lurch, where it has been since General Suharto was booted out of the presidency in May 1998 after more than three decades of absolute power. Wahid, a 60-year-old Muslim cleric, has been in power since October 1999. By all counts he was the man least likely to have been elevated to the presidency and the least likely to have survived so long. His stock and trade is that of diversionary tactics, ducking and dodging his enemies. In fact, one of his favorite tricks is to reshuffle his cabinet, which he has done ten times, when the opposition looks like it is closing in on him.

I doubt there is any serious person who believes that Wahid is competent to rule Indonesia. The man has got to go. Yet for whatever reason, maybe because of political or economic chaos, a replacement leader has yet to appear on the scene. There are candidates, of course, but the problem is how to get them to office.

This is a prime example of how a country such as Indonesia can suffer long after a tyrant is removed. Independence from dictatorship is freedom but is also freedom to flounder.

And the problem for newly democratic nations in some cases is that the people who come to power after a revolution are unable or unfit to govern. It is not too surprising because the old regime often held onto power by creating a vacuum in which there are no workable alternatives to their tenure.

The Lady In Waiting

Which brings me to the big question: When does Megawati Soekarnoputri, the vice president, and in some people's mind the heir apparent, make her power play? Megawati is the daughter of the dictator Sukarno, who ruled Indonesia from 1956 to 1966. Does this lion cub hunt?

So far, Madame Vice President has shown little outward interest in governing.

Megawati is either the shrewdest person to come down the pike or a complete lightweight. I say shrewd because her indifference could be the sign of someone who knows about timing. To a very clever politician there would be no point in taking over the country until it has nearly hit bottom. The art is to catch the point of inflection, when things start to improve.

So that may be the Megawati index for us to watch. We will know that things are looking better to this ultimate insider when she starts to assert control. Until then, the lady is at leisure. Or maybe she just doesn't care.

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05/17 23:57

Time to Debunk the Fed's Image of Omnipotence:

By David DeRosa

New Canaan, Connecticut, May 18 (Bloomberg) -- Do you sincerely believe the U.S. Federal Reserve can jump start the growth-stalled American economy by cutting short-term interest rates? Is the Fed really that good? Apparently stock market investors think so. How else can Wednesday's 342-point surge in the Dow Jones Industrial Average -- one day after the Fed cut the interest rate -- be explained?

This leads me to think that a lot more than stock prices, jobs and profits rides on whether Federal Reserve Chairman Alan Greenspan's latest policy gambit is a success. What is on the line is the image of the U.S. central bank as supreme controller of the economy. And a good deal of mythology is contained in that image, one should note.

Consider what has happened. Around last October the mighty U.S. economic growth story derailed. After nearly a decade of superlative growth, U.S. companies began to report sales slipping and profits evaporating. Let us not forget that the Federal Reserve raised interest rates less than two years ago -- though practically nobody seems to remember that questionable policy move today.

On Tuesday, the Fed cut its target for federal funds by one half of 1 percent to 4 percent Tuesday. This was the fifth time this year the Fed has cut the short-term rate for overnight interbank lending -- and remember that we are only in the month of May. In total, the target for federal funds has dropped by 2.5 percent since the Fed began cutting interest rates in January.

Simplistic Beliefs

To wit, the Fed's explanation of Tuesdays' cut left open the possibility that it will make further cuts in interest rates with its declaration that the risks of further economic weakness will remain for the foreseeable future. So not only did the interest rate come down by one half of 1 percent on Tuesday, but investors came to believe that more cuts are in the pipeline.

What I find amazing is the complacency with which people accept the situation in which the Fed finds itself. Face it -- the Fed has all the appearances of a central bank that is running for its life. It is dropping interest rates like a sinking ship jettisoning ballast.

But the general belief persists that the Fed, and, to get personal, Alan Greenspan, are omnipotent and all-powerful in the stewardship of the economy.

Never mind that a whole host of central bankers around the world have throughout history failed miserably in their attempts to fine-tune their economies. People still want to believe that Greenspan can slow the economy down when it is too hot and can invigorate it when it is dragging.

Debunking the Fed

The cult of Greenspan originated during the long period of prosperity and growth in the 1990s. The conventional wisdom is that Greenspan (more than President Bill Clinton) should be credited with America's economic miracle.

Not that Greenspan went about trying to create his public image. The economy boomed, inflation remained under control, the stock market flourished (for most of his watch), so he got to wear the laurels. And I am not saying that Greenspan isn't a rather good central banker. But to be realistic, he was in the right place at the right time.

If Greenspan pulls this off -- if he can resuscitate the economy, get it to begin to grow again -- it will perpetuate the myth of the superman central banker. And as much as I would like to see the economy pick up, I worry that it would reinforce the erroneous view of the Fed.

On the other hand, there is a silver lining to the possibility that the economy will not respond to the Fed's tonic. I can't help thinking that it would do the country a lot of good for people to be disabused of their fairy tale belief in the power and competence of the central bank. If people stopped expecting the impossible, it might be a great relief for Alan Greenspan.