Jakarta (KRISMON!)

For Stocks, Worst Single-Day Drop in Two Decades

By MICHAEL M. GRYNBAUM
Published: September 29, 2008

It was the Black Monday of 2008.

Stocks fell by nearly 9 percent on Monday – the worst single-day drop in two decades – after the government’s bailout plan, touted by its supporters as a balm for the current market stress, failed to pass the House of Representatives, setting off a fresh wave of anxious selling.

In yet another day that has shaken the embattled canyons of Wall Street, the Dow Jones industrials fell 777.68 points after it became clear that the legislation could not muster the support it needed to pass the House.

The broadest measure of the American stock market, the Standard & Poor’s 500-stock index, fell 8.77 percent, its biggest drop since October 1987. The Nasdaq composite index fell by more than 9 percent, after the House defeated the bill by a vote of 228-205.

The fear was most pronounced in the world’s credit markets, considered gauges of anxiety among investors. Yields on Treasuries plummeted after the House rejected the plan, with the one-month Treasury note yielding virtually zero. …> go to article

Paul Krugman writes today:

New York Time, September 29, 2008, 3:02 pm

OK, we are a banana republic

House votes no. Rex Nutting has the best line: House to Wall Street: Drop Dead. He also correctly places the blame and/or credit with House Republicans. For reasons I’ve already explained, I don’t think the Dem leadership was in a position to craft a bill that would have achieved overwhelming Democratic support, so make or break was whether enough GOPers would sign on. They didn’t.

I assume Pelosi calls a new vote; but if it fails, then what? I guess write a bill that is actually, you know, a good plan, and try to pass it – though politically it might not make sense to try until after the election.

For now, I’m just going to quote myself:

So what we now have is non-functional government in the face of a major crisis, because Congress includes a quorum of crazies and nobody trusts the White House an inch.
As a friend said last night, we’ve become a banana republic with nukes. …> go to article

Brother, can you spare a rupiah?

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Jakarta (The World Bank, IMF, US debt)

Oh say does that star spangled banner yet wave o’er the land of the free and the home of the brave?

If you think the current KRISMON in the United States does not have global reach, think again. The New York Times reports this morning:

Rescue Plan Seeks $700 Billion to Buy Bad Mortgages

By DAVID M. HERSZENHORN
Published: September 20, 2008

WASHINGTON – The Bush administration on Saturday formally proposed to Congress what could become the largest financial bailout in United States history, requesting virtually unfettered authority for the Treasury to buy up to $700 billion in mortgage-related assets from financial institutions based in the United States.

The proposal was stunning for its stark simplicity: less than three pages, it would raise the national debt ceiling to $11.3 trillion. And it would place no restrictions on the administration other than requiring semiannual reports to Congress, allowing the Treasury to buy and resell mortgage debt as it sees fit.

Staff members from the Treasury Department and the House Financial Services and Senate banking committees immediately began meeting on Capitol Hill, where negotiations were likely to be complicated but quick. Democratic Congressional leaders have pledged to help approve legislation by the end of this week.

The plan, an ambitious effort to transfer the bad debts of Wall Street into the obligations of American taxpayers, was put forward by the administration late last week, after a series of bold interventions on behalf of ailing private firms seemed unlikely to prevent a crash of world financial markets. …> go to article

 The figure of 700 billion dollars is really an open ended question as no one knows the true depth of the problem. But those who run the financial sector in the United States apparently know the answer. Profits are private. Debt is public.  The United States has been living well above its means for a long time. The gap between the rich and the poor is wider than at any other time in our history. In any other country in the world the World Bank and the IMF would show up with a ten point plan for economic recovery.  Indonesians, especially Jakartans, should remember what that looks like. 

Hey U.S., welcome to the Third World!
It’s been a quick slide from economic superpower to economic basket case.

Los Angeles Times, Rosa Brooks
September 18, 2008

“Dear United States, Welcome to the Third World!

 It’s not every day that a superpower makes a bid to transform itself into a Third World nation, and we here at the World Bank and the International Monetary Fund want to be among the first to welcome you to the community of states in desperate need of international economic assistance. As you spiral into a catastrophic financial meltdown, we are delighted to respond to your Treasury Department’s request that we undertake a joint stability assessment of your financial sector. In these turbulent times, we can provide services ranging from subsidized loans to expert advisors willing to perform an emergency overhaul of your entire government.

As you know, some outside intervention in your economy is overdue. Last week — even before Wall Street’s latest collapse — 13 former finance ministers convened at the University of Virginia and agreed that you must fix your “broken financial system.” Australia’s Peter Costello noted that lately you’ve been “exporting instability” in world markets, and Yashwant Sinha, former finance minister of India, concluded, “The time has come. The U.S. should accept some monitoring by the IMF.”

We hope you won’t feel embarrassed as we assess the stability of your economy and suggest needed changes. Remember, many other countries have been in your shoes. We’ve bailed out the economies of Argentina, Brazil, Indonesia and South Korea. But whether our work is in Sudan, Bangladesh or now the United States, our experts are committed to intervening in national economies with care and sensitivity.

We thus want to acknowledge the progress you have made in your evolution from economic superpower to economic basket case. Normally, such a process might take 100 years or more. With your oscillation between free-market extremism and nationalization of private companies, however, you have successfully achieved, in a few short years, many of the key hallmarks of Third World economies.

Your policies of irresponsible government deregulation in critical sectors allowed you to rapidly develop an energy crisis, a housing crisis, a credit crisis and a financial market crisis, all at once, and accompanied (and partly caused) by impressive levels of corruption and speculation. Meanwhile, those of your political leaders charged with oversight were either napping or in bed with corporate lobbyists.

Take John McCain, your Republican presidential nominee, whose senior staff includes half a dozen prominent former lobbyists. As he recently put it, “I was chairman of the [Senate] Commerce Committee that oversights every part of the economy.” No question about it: Your leaders’ failure to notice the damage done by irresponsible deregulation was indeed an oversight of epic proportions.

Now you are facing the consequences. Income inequality has increased, as the rich have gotten windfalls while the middle class has seen incomes stagnate. Fewer and fewer of your citizens have access to affordable housing, healthcare or security in retirement. Even life expectancy has dropped. And when your economic woes went from chronic to acute, you responded — like so many Third World states have — with an extensive program of nationalizing private companies and assets. Your mortgage giants Fannie Mae and Freddie Mac are now state owned and controlled, and this week your reinsurance giant AIG was effectively nationalized, with the Federal Reserve Board seizing an 80% equity stake in the flailing company.

Some might deride this as socialism. But desperate times call for desperate measures.

Admittedly, your transition to Third World status is far from over, and it won’t be painless. At first, for instance, you may find it hard to get used to the shantytowns that will replace the exurban sprawl of McMansions that helped fuel the real estate speculation bubble. But in time, such shantytowns will simply become part of the landscape. Similarly, as unemployment rates continue to rise, you will initially struggle to find a use for the expanding pool of angry, jobless young men. But you will gradually realize that you can recruit them to fight in a ceaseless round of armed conflicts, a solution that has been utilized by many other Third World states before you. Indeed, with your wars in Iraq and Afghanistan, you are off to an excellent start.

Perhaps this letter comes as a surprise to you, and you feel you’re not fully ready to join the Third World. Don’t let this feeling concern you. Though you may never have realized it, you’ve been preparing for this moment for years.” …> go to article

 As all this is going on Houston, Texas, the forth largest city in the United States is still larely without electricity and drinking water due to Hurricane Ike which caused an estimated $20 billion is damages.  People are standing in four mile long lines for food and living in tents. The stench in Galveston is nearly unbearable. Compared to the current situation in Houston, Jakarta appears as a holiday get-away destination. And New Orleans has yet to fully recover from Hurricane Katrina.  The United States in engaged in two wars, one of which is costing $10 billion a month. 

And everything is being financed by debt.

Henry Paulson is now President, elected in a secret closed door meeting.  The US Treasury Department is now running the United States taking its marching orders from the Federal Reserve. 

All of this is far from over and whatever the outcomes, which I assure you will not be pleasant, they will have global implications.

 

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Jakarta (fear of the street, part 2)

Taman Anggrek, Jakarta 

 

 

 

 

 

 

 

 

 

 

West Jakarta

 

I have left Jakarta. Three weeks of eating the Jakarta air and being saturated with advertising (promising much but delivering little) has been interesting to say the least.  But just in time anyway for MENTAL DETOX WEEK.

At my family’s house, just outside of Depok, TelKom Indonesia, has been out of order for the last six days. I had internet access on one of those six days.  But as my family says (almost in a chorus) “well, you know, that’s Indonesia”.

I have come away with over 500 photographs and 17 short videos.  Some of those, after I process it all (both mentally and physically) will filter down into the future postings of Jakarta Urban Blog. That in itself is worth returning for, yes?

In the meantime I have a layover in Seoul, Korea. Here there is high speed internet 24/7. It is free. But, alas it is not Jakarta.  

In any event to keep myself occupied I am posting the second part of my review of Chapter Four: The Violence of Categories: Urban Space and the Making of the National Subject in Abidin Kusno’s book Behind the Post-Colonial: Architecture, urban space and political cultures in Indonesia.

THE PROTECTING EYES OF THE FATHER, THE DEATH OF THE STREET, AND THE BIRTH OF THE NATIONAL FAMILY

Kusno: “The New Order of Suharto, however, did not legitimize its presence by merely fabricating the threat of “internal” others, initiating the danger of the street and providing security measures. Instead, a second point of tensions associated with a desire to form a new collective subject that represented “modernity” complicated these techniques of social control through the heavy-handed display of power and the spectacle of punishment”.

In 1974 the first student protests, demonstration, and urban youth riots occurred. The regime was beset not only with attempting to bridge the rapidly widening gap between the rich and the poor but also to satisfy demands for upward mobility.

Here again Jakarta would be used as a “symbol of the nation” but not to instill a national or revolutionary spirit as that of the Sukarno generation. This time it would be used to form, as Kusno states “national subjects who were both obedient and “modern”. Suharto’s style was to “guide from behind” like an ever-watchful parent. He is the “smiling general” representing the ideology of “development”. This idea as Kusno states “had its sense of authentic Javanese wisdom in which the children of the family are guided from behind to their destined place. The lesson has been that they know their place, do not get lost, or go astray”.

And here is what happens.

Kusno: “This task, of preventing national subjects from going astray, was perhaps first practiced by the famous Governor of Jakarta, Ali Sadikin, a Sukarno protégé who also worked under Suharto from 1966-1977. From the beginning of his administration, Sadikin found himself dealing with what he came to perceive as the problem of “urban excess”, namely, the migration of people who lacked “urban rationality” to the capital city. Under his tenure, Jakarta was given the title of “metropolitan” and “modernity” was defined in relation to the spaces occupied by the urban poor who were then subjected to the strong arm of the law”.

Here is Sadikin’s twisted logic, “The execution of law enforcement is homage to the poor people (‘rakyat kecil’). They are those with no skill, who are lacking consciousness of the law, who build their houses along riverbanks, along railways, under electric poles, along the green belt, those who sleep under bridges or in the park, or use pedestrian ways and streets for vending, those who ride ‘becak‘ (pedicab).”

The urban problems Sadikin lists are still present today in Jakarta but his war on the becak was a success. Becak, nearly synonymous with Jakarta and Indonesia, were confiscated under force, gathered up, and dumped into the ocean.

Kusno cites Sadikin, “This form of transportation, used by the poor, was too slow for “the economy (which) should move faster” and furthermore, “it is hard to administer, and the leadership simply does not want rustic-looking people pushing bikes around in their capital city”.

Kusno: “Here the memories of the populist politics of the previous regimes and the social environment of the poor became interchangeable. Both became “non-modern” elements in the city. For Sadikin, the capital of the nation must be represented as modern so that “potential troubles” embedded on the streets and in environments constructed as “non-modern”, could be suppressed, eliminated, and transformed”.

FLYING OVER THE KAMPUNG: CLASSIFYING NATIONAL SUBJECTS

Kusno: “Central to the state’s concern about discipline and order in the city, therefore, are the overlapping interests between the government’s promotion of its ideology of “development” on the one hand and the increasing numbers of the new generation of New Order “middle class”, for want of a better word, concerned with their identity, on the other. Here elevated highways occupy a special position, not least because of their “visibility”, like a giant roller coaster stretching over the capital city. The elevated highways are not just a means for de-congesting metropolitan Jakarta; they are also a sign of progress for developmentalist regime that measures its achievement through the way the city is represented…

Driving through the elevated highways suggests an experience of flying over the top of the city, escaping from its congested roads and leaving behind the “lower” classes who are routed through the crowded street at ground level. From this suspended driveway, the details of the urban fabric of Jakarta’s streets and kampung, the poor urban neighborhoods, are transformed into a series of blurred images, giving a sense of detachment from the “worldly” place below. The elevated highway is thus a system of representation that allows some forms and spaces to be visualized and others to be concealed. It is a kind of fluency provided by the city to create a dream-state of upward mobility in order to overcome the contradictions of “development”…

…this infrastructure is not merely a representation of the dominant class. It also helps to constitute the general populace by way of city buses that occasionally travel on the elevated highways. On these occasions, the relatively poor urbanites are also provided with a similar new experience of the city, but with different political implications. Here urban space is constructed to define and regulate both the privileged and the poor. They are both celebrated and constituted by the urban infrastructure, constructed to assemble crowds for uplifting purposes…

…This emphasis on the centrality of vision in architecture and urban space constitutes a phantasmagoria of display of the achievement of the New Order in embracing commodity capitalism. Along with the highway net work, it reaches its apogee in the design of department stores, high-rise office towers and real estate housing, all of which are seen to provide a field of vision available for the well-to-do. On the other side, the majority of the poor that live behind this façade, surrounded by images of a metropolis, are conditioned by the visible proof of “historical progress”. From pleasure, alienation and wonder that are derived from spectacle alone a society of consumption is produced (emphasis mine)”.

 

There is a punch line to this which I will attempt to deliver in Jakarta (fear of the street, part 3)…