:: For fun - Bear Stearns Rhapsody

It's not something about Indonesia,but still this post is something interesting to be shared. I found this post on Ahli Keuangan mailing list. For my introduction,it is about Bear Sterns having bought at cheap price by JP Morgan.

Bear Stearns Rhapsody
(using Queen's Bohemian Rhapsody tune)

Is this the real price?
Is this just fantasy?
Financial landslide
No escape from reality

Open your eyes
And look at your buys and see.
I'm now a poor boy (poor boy)
High-yielding casualty
Because I bought it high, watched it blow
Rating high, value low
Any way the Fed goes
Doesn't really matter to me, to me

Mama - just killed my fund
Quoted CDO's instead
Pulled the trigger, now it's dead
Mama - I had just begun
These CDO's have blown it all away
Mama - oooh-hoo-ooo
I still wanna buy
I sometimes wish I'd never left Goldman at all.

(guitar solo)

~~~

I see a little silhouette of a Fed
Bernanke! Bernanke! Can you save the whole market?
Monolines and munis - very very frightening me!
Super senior, super senior
Super senior CDO - magnifico

I'm long of subprime, nobody loves me
He's long of subprime CDO fantasy
Spare the margin call you monstrous PB!
Easy come easy go, will you let me go?
Peloton! No - we will not let you go - let him go
Peloton! We will not let you go
(let him go !)
Peloton! We will not let you go - let me go
Will not let you go
let me go (never) Never let you go - let me go Never let me go - ooo
No, no, no, no, No, NO, NO ! -
Oh mama mia, mama mia, mama mia let me go
S&P had the devil put aside
for me
For me, for me, for me

~~~

So you think you can fund me and spit in my eye?
And then margin call me and leave me to die Oh PB - can't do this to me
Just gotta get out - just gotta get right outta here

Ooh yeah, ooh yeah
No price really matters
No liquidity
Nothing really matters - no price really matters to me
Any way the Fed goes.....

:: ID Government debt via ORI v.4

Debt capability for any enitity either individual nor organization is relative. The simplest example if any of you applying credit card. Some of you will get silver card while other got gold or platinum card, some of you got IDR 4 Mil (about $400) limit while other got IDR 150 Mil (about $15.000) limit. What difference among the applicants that takes into account? To put it simple it was the illusion of repaying capabilities, not the repaying capabilities itself. Statistics you put on the application form will create illusion of your repaying capabilities on the analyst head.

Furthermore, it is exactly the same in the macro level application. The illution in which we ofthen say sovereign credibility is the main item that analyst put into account. If your country on war then your repaying capability would be assumed close to nothing, when your country got a grip on bullish commodities then it's repaying capability would be high. In micro level, i have conducting some analysis about this and has proven, this also happen within enterprise level.The more confidence (not capable) you are, the more aggressive your leverage policy.

Now let say illusion that been performed these days by Indonesian were the uprising price of it's main commodity (nickel, lead, CPO, etc) then it is sufficient for us to say that government still and will more confidence upon the economy in the future, thus ID Government will tend to increase it's debt.

is it good/bad?

there are 2 different opinion on this,

1. in the long run things are getting better, debt will increase country economic capability and will decrease it's need of finance through debt. (the problem is according to my opinion earlier, the bigger the country's economic capability the more confidence it's government and the more tendency to increase it's debt. This will snowballing 'til something get wrong)
   
2. how long is the long run? is it not to account the debt's interest as short term liability, if we continue to increase our debt, is it not increasing the repayment risk?
   

IMHO, it's all about balance. Balance in this context not define as one point all-problem-solved things. But balance that vary from one entity to other. And yes, we should use the momentum of bullish commodity price to increase our confidence; but still the key point is, the debt we acquire should be able increasing our economic capacity, and we should take into account our repayment capacity.

Now, about ORI (Obligasi Ritel Indonesia/Indonesia Retail Bond); this instrument was created in the circumstances of increasing dollar price,thus issuing bond in dollar might increase risk; this instrument basically is 5 year's bond in small figure nominal, the smallest fracture could be IDR 5 Million(about $500), with the bearish tendency on our key interest rate (which is good!) people seeking alternative to normal time-deposit in bank, while this instrument offering 2-3 percent incentive above normal time-deposit account in banks (ORI 1 gave 12,5% coupon, ORI2 gave about 10% coupon, ORI3 gave 9,25% Coupon, ORI4 will give 9,5% coupon). The issuance of retail bond give ID Gov. several advantage that :

1. Spread risk, since the fracture size small the bondholder expected to be high. Though in my opinion this advantage would be weaken once the bond entering secondary market.
2. Decreasing financial dependency on overseas bond
   

Being a muslim dominated country, however the ORI issuance raise some skepticism among people, since bond, an interest bearing liability (or in Islam called riba') are not allowed. I'm not in any judging position on the religion-context, thus i still say that, what i explained earlier in this post would be my stand point. It's all about ballance. And i'm quite confidence about the way the recent government handling ID businesses environment and furthermore ID economy (which is most likely not corrupt nor reckless).

:: the closing of Adam Air

To be frank, i hate Adam Air,the management to be precise. It's misconduct for flight safety (search Google for PPRuNe forum then look for Adam Air topics), the infamous ground handling, and foremost it's conspiracy that i presumed there is.

Being a mid-level income people, yes i do thank for the presence of LCC in Indonesia. Garuda, the full-serviced airline price surely will kill my saving account. But it is not like that i will gave my life upon the price (these point is debatable for Indonesian LOL). Now for Adam Air topics, there is some point's i'd like to strengthen about it's closing.

[analyst mode : on]
1st of all, i'd like to say that, my feeling gave me the chill that there is some ill purpose on Adam Air closing. To put is simple it was :

1. First Lie, in it's management press release. AA Management gave a statement that this closing was due to bhakti investama (50% shareholder) went out of Adam. This is in my opinion was truly a lie. Being a 50% shareholder mean that bhakti does not own majority in stock ownership, mean that bhakti could not easily take it's investment out of a running company like a finger snap, bhakti could sell it's ownership (which is not happen) to claim it's money. The proper statement to be announce should be bhakti did not agree to inject fresh money into the company. Bhakti said, this was due to AA lack of financial disclosure, that is suspicious (bhakti said that they have evidence some cash missing from the cash account).
2. Second conspiracy, is there anyone notice why AA choose to announce its closing around tha peak hour (there is 4 days holiday near its closing). I presume they want to cash out as many as they can from pre-order, pre-payment ticket. And do we notice that they have some unpaid liability about insurance, airport payment and plane fuel, which sum up to be near IDR 200 Bill (about $20 Mill), is this figure a 5 fivedays liability or this airline has plan this closing (read:cashout) carefully?
   

This topics is truly interesting that it is giving me some desire to do analysis on its financial statement. pity then, since it is not a public company then it's financial statement not release to public. But.......is there anyone out there able to giving me the fun (read : financial statement), please contact me in person.

opinion :: price hiking in Indonesia

Just this weekend me and my family go shopping for our routine consumables. Usually it cost about somewhere between 250K to 300K IDR for 2 weeks consumables consist of my baby's consumables (diaper, milk, cotton balls, etc) and few goods for me and wife, But at that time it cost me nearly 500K IDR for my usual stuff. It worry me so i collect few fact on Indonesia's Inflation.


Judging from the trend it is obvious that we experiencing a sharp rising in inflation, not that spiral inflation high or one-shot inflation high like it is in the past, but still it's a price hike. You can fetch the inflation detail here it's in Bahasa thought, so here is the summary of it as of January 2008 :

• Food 2,77 percent,
  
• Processed Food, Cigarette and Tobacco 2,02 percent,
  
• Housing, water, electricity, oil and gas 1,80 percent,
  
• Cloth 2,31 percent,
  
• Health 0,72 percent,
  
• Education, Recreation and Sport 0,01 percent
• Financial Service, Transportation and Communication 0,24 percent.

And now for the worst part of this log. I just found that in accordance to the inflation fact, Central bank has expected to raise the interest rate. This would mean a slowdown in our economy since ID's economy still recovering from 1998's crisis that LDR is plummeted to lower than 50%, These days we experience a relatively high growth for fact that lower rate had lure more businessman expand their business using the bank's money (debt).