Monorail Jakarta

Monorail Jakarta was a Mass Transit System with single rail train, which is under construction in Jakarta, Indonesia. Monorail is a transportation system that uses a single track, where trains run to follow the track rail. Called the Light Rapid Transit for light construction and walking on a special track, with a capacity in the serve a lot of commuter traffic. There is two lanes are being built: Green Lane serve Semanggi-Casablanca-Kuningan-Semanggi, and Blue Lane serve Kampung Melayu-Casablanca-Tanah Abang-Roxy. The project was confronted by financial difficulties and technological changes alternately. This project in 2003 was originally given to Malaysian company MTrans, KL Monorail builder, construction began in June 2004 but postponed only after walking a few weeks. MTrans MoU was canceled, and then the project given to a consortium of major projects in Singapore Omnico, which proposes using maglev technology by ROTEM of South Korean companies.

In July 2005, the project changed hands again with the new MoU to a consortium of Indonesian companies PT Bukaka Technique Utama, PT INKA, and Siemens Indonesia. Omnico oppose this, and the lates schedule of 2007 is unlikely to happen. But in October 2005 the construction still continues, with the assumption that the basic foundation "piles" and pillars can be used by the consortium that won the tender and technology.

But the monorail’s piles that stands in Jakarta increasingly obscure fate. In the current financial crisis, DKI Jakarta’s Provincial Government was very pessimistic going to be able to build a monorail that has long held by Malaysia and Thailand. The global financial crisis makes Jakarta’s Government difficult to find lenders that willing to finance the monorail projects which is worth of 600 million U.S. dollars.

Now that piles just only make another traffic jam in Jakarta. The vehicle that want to pass was blocked by the piles. This project that should be the solution of Jakarta’s traffic problem even become a new problem of traffic jam in Jakarta. The Government just waste money by doing this project. They should estimate the problem that may be appear when project uncomplete. The government seems not think about the resources that we have before implementing this project and not think whether we can or not implement this project. And then in the end all just be in vain.

Surplus ça change What would happen if China revalued the yuan? The past offers some clues

A BIG export-oriented economy is booming but its trading partners are livid. Year after year, they point out, it runs large current-account surpluses. The country regards itself as an export powerhouse whose goods are prized abroad. Others castigate it for mercantilism. Some argue that it subsidises its exports unfairly by giving exporters credit at cheap rates and by keeping its currency artificially undervalued. Pressure builds on the country to revalue its currency and boost domestic consumption, which makes up an unusually small share of its GDP.

Today this description makes you think of China, or perhaps Germany. But as research published in the IMF’s latest “World Economic Outlook” makes clear, plenty of other countries have been in a similar situation: Japan in the early 1970s, West Germany in the late 1960s, and South Korea, Japan or Vietnam in the years leading up to 1988. The Chinese current-account surplus in 2008 was 21% of the combined total for surplus countries. Germany in 1967 and Japan in 1971 both had a fifth of the world’s total surplus, too. Today’s surplus countries can take some comfort from the fact that they are not historical anomalies.

That these surplus economies of the past resemble China or Germany today is not the only reason they are interesting. It turns out that they also did much as these countries are now being exhorted to do, altering their economic policies to reverse their persistent surpluses. Some relied in the first instance on allowing their exchange rate to appreciate, as America would like China to do (though fiscal or monetary adjustments often followed). Others turned to fiscal and monetary stimulus to boost domestic demand, a policy Germany is now being urged to follow by some of its euro-zone peers. Yet others used labour-market or financial-sector reform to boost domestic demand. By poring over countries’ current-account statistics and changes in economic policy, IMF economists have identified 28 instances of such “policy-induced surplus reversals” over the past half-century. They then examined those episodes for clues about the possible impact of similar moves by today’s surplus countries.

Less may be more

Changing course certainly worked as far as restoring external balance was concerned. On average, the surplus narrowed by 5.1 percentage points of GDP. The contribution of net exports to GDP growth fell by 1.6 percentage points, mainly because imports increased sharply whereas exports were on average unchanged. Oddly enough, however, shifting out of surplus did not affect growth appreciably in either direction (see chart). The IMF economists reckon that it was a few tenths of a percentage point higher in the three years after countries started tackling their surpluses than in the three preceding years, but this difference is so small that it is well within the statistical margin of error.

That is because increased contributions to growth from private consumption and investment, which boosted expansion by an additional 1.0 and 0.7 percentage points respectively, were enough to offset the declining contribution of net exports. Economic growth simply came from different sources. Foreign demand was replaced by local demand. Likewise, fewer workers were employed in the parts of the economy that produced goods for sale abroad, but just as many more found work making things that were consumed within the country’s borders. On average, there was “full rebalancing”.

All this might suggest that China has little to fear from a revaluation of the yuan. But that conclusion is slightly tempered by another of the fund’s findings. Countries that engineered a reversal primarily by revaluing their currency fared differently from those that relied on fiscal or monetary stimulus. Growth declined in the former case and rose slightly in the latter. Once again, neither effect was large enough that it lay outside the margin of error. But the economists find that, all else being equal, a 10% appreciation in the exchange rate reduces GDP growth by around one percentage point. Given actual exchange-rate movements, the IMF reckons that if the only thing surplus countries had done was to let their currencies rise, then growth might have ended up declining by between two and four percentage points.

Countries do not, however, tend to rely on only one tool to get rid of their surpluses. That the declines were much smaller on average was because the effects of the appreciation were offset by demand-boosting fiscal, monetary and structural policies. For instance, South Korea and Taiwan in the 1980s, which are two of the surplus countries of the past that look most like China today, also significantly liberalised their domestic financial sectors when they let their currencies rise. In some countries that had exchange-rate appreciations exports moved up the value chain: this also helped. These countries did not so much export less after they revalued as export different, more expensive things. But they saved less and consumed and imported more, contributing more to global demand.

A separate analysis, published as part of the Asian Development Bank’s (ADB) latest “Asian Development Outlook”, also indicates that Asia’s exports may be less sensitive to exchange-rate movements than a study of history may suggest. This is because many production processes are now separated into stages that are carried out in different countries. This means that a greater share of Asian trade—32% of exports from Asia’s developing economies in 2007, up from 13% in 1992—is now made up of trade in parts and components. The ADB’s economists find that trade in parts is much less sensitive to changes in the real exchange rate than trade in finished products. If China revalues, it may need to worry even less about a collapse in its exports than past experience implies.

There are, in any case, other benefits to reducing current-account surpluses than just satisfying miffed trading partners. In many cases of past rebalancing, an undervalued exchange rate also led to excessive growth in money supply, making it harder to tame inflation. The desire to regain control over monetary policy was one of the reasons South Korea let the won rise in 1989 and Taiwan allowed its currency to appreciate in 1988. If China revalues the yuan in 2010 it may be for similar reasons.

http://www.economist.com

The importance of not being Greece A government desperate to persuade markets that it is better than they fear

FORGET slogans about golden beaches or vinho verde. What the Portuguese government wants the world to know is simpler: Portugal is not Greece. Far from having the next sovereign-debt crisis, as predicted by several economists, politicians are painting Portugal as a well-behaved member of the euro, in no way comparable to wayward, mendacious Greece.

Portugal is doing better than Greece in its budget deficit (9.4% of GDP in 2009, compared with 12.7%) and public debt (85% of GDP this year, against 124% in Greece). Unlike Greece, its public accounts are credible and it has a record of taking tough fiscal measures when necessary—between 2005 and 2007, it cut its budget deficit in half, from 6.1% of GDP to 2.6%. A four-year austerity programme to chop the budget deficit again, this time to 2.8% of GDP in 2013, has been adopted.

Again unlike Greece, the centre-left government of José Sócrates is a pioneer of reform. It has linked pensions to changes in life expectancy and introduced incentives for later retirement. According to the European Commission, age-related public spending will rise by only 2.9% of GDP in Portugal over the next 50 years, compared with a euro-area average of 5.1% and a startling 16% in Greece. Despite some public-sector protests, opposition to spending cuts is less noisy than in Greece.

So why are markets fretting over Lisbon’s debt burden (yields on two-year bonds have risen to 4.8%)? And why have such figures as Simon Johnson, a former IMF chief economist, and Nouriel Roubini, a New York economics professor once labelled Dr Doom, said that a Greek-style crisis could infect Portugal?

One answer is that Portugal’s biggest problem is not primarily fiscal. It concerns growth—or the lack of it. Real GDP growth over the decade since Portugal joined the euro has been the slowest in the zone, despite a boom in Spain, its main trading partner. The country avoided a property bubble of the kind that burst so disastrously in Spain and Ireland. Though it doesn’t help much, Portugal’s already slow growth also made it less vulnerable to the global recession. “Spain was the wild tiger of Europe and had much further to fall when the recession came,” says João Talone, a private-equity manager. “Portuguese companies were already used to extracting value in a difficult climate.”

Low growth reflects a disastrous loss of competitiveness since the country joined the euro. Portugal has lost export-market share to emerging economies (including those of eastern Europe) that churn out similar low-value products. This is largely due to a steady rise in unit labour costs, as wage increases outstripped productivity growth (see chart). One consequence is that the Portuguese, once exemplary savers, have been borrowing heavily abroad. Household debt is now the equivalent of almost 100% of GDP and the debt of non-financial companies is nearly 140%.

Mr Sócrates sees himself as the modern face of a country in transition from low-cost manufacturing to knowledge-based industries. In five years, he claims, Portugal has become a European leader in renewable energy. It has also cut civil-service jobs from 747,000 to 675,000. It sends some 35% of its young people to university. It is investing over 1.5% of GDP in research, much more than Spain. At the same time, however, Portugal is losing some of its EU structural funds to the club’s newer, poorer members from eastern Europe.

A slow-moving bureaucracy, inefficient courts, poor schools and state-supported pockets of the economy protected from competition combine to hold Portugal back. Businessmen moan about rigid labour laws, which there is little political will to reform. Portugal has one of Europe’s toughest employee-protection regimes.

In short, Portugal is indeed different from Greece. But if the markets decided to put this to the test, chronic low growth, a drastic loss of competitiveness and high public and private indebtedness are all weaknesses which could swiftly undermine the protection that being different is meant to bring.

http://www.economist.com

Acropolis now The Greek debt crisis is spreading. Europe needs a bolder, broader solution—and quickly

THERE comes a moment in many debt crises when events spiral out of control. As panic sets in, bond yields lurch sickeningly upwards and fear spreads to shares and currencies. In September 2008 the failure of once-stellar Lehman Brothers almost brought down the world’s banking system. A decade earlier, Russia’s chaotic default on its sovereign debt rocked the credit markets, felling Long Term Capital Management, a hugely profitable American hedge fund. When the unthinkable suddenly becomes the inevitable, without pausing in the realm of the improbable, then you have contagion.

The Greek crisis—or more properly Europe’s sovereign-debt crisis—looks dangerously close to that (see article). Even as negotiators from the European Union and the IMF are haggling with the Greek government over an ever-growing bail-out package, the yield on Greek debt has ballooned: two-year bonds soared towards 20% this week. Portugal’s borrowing costs jumped. Spain’s debt was downgraded, along with Portugal’s and Greece’s, and Italy came worryingly close to a failed debt auction. European stockmarkets have slumped and the euro itself fell to its lowest level in a year against the dollar.

The road into Hades…

It will strike some as mystifying that a small, peripheral economy should suddenly threaten the world’s biggest economic area. Yet, though it is only 2.6% of euro-zone GDP, Greece sounds three warnings that reach far beyond its borders.

The first is economic. Greece has become a symbol of government indebtedness. This crisis began last October when its new government admitted that its predecessor had falsified the national accounts. It is labouring under a budget deficit of 13.6% and a stock of debt equal to 115% of GDP. It cannot grow out of trouble because of fiscal retrenchment and its lack of export prowess. It cannot devalue, because it is in the euro zone. And yet its people seem unwilling to endure the cuts in wages and services needed to make the economy competitive. In short, Greece looks bust.

Few, if any, European countries suffer from all of Greece’s ills, but many scare investors. Portugal has a high budget deficit and is chronically uncompetitive. Spain has a low stock of debt, but it seems unable to restructure its economy. So too Italy, which is heavily indebted to boot. Non-euro-zone Britain has let its currency fall, but its budget deficit is unnerving.

The second lesson is political. Two weeks ago, having concluded that an eventual Greek restructuring was all but inevitable, we said Europe’s leaders had “three years to save the euro”. We presumed that they would quickly get a proposed €45 billion ($60 billion) deal to stave off an imminent and chaotic Greek default, buying time for an orderly rescheduling and for the other weak economies to begin overdue structural reforms. We overestimated their common sense.

The chief culprit is Germany. All along, it has tried to have it every way—to back Greece, but to punish it for its mistakes; to support the Greek economy, but not to spend any money doing so; to treat this as just a Greek problem, when German banks and German citizens, who lend to Greece, stand to lose money too. German voters do not favour aiding Greece. But rather than explain to them why it is in Germany’s interest, the chancellor, Angela Merkel, has run scared of upsetting them before a big regional election on May 9th.

Playing for time has backfired. Now the mooted rescue plan has climbed above €100 billion because no private money is available. The longer euro-zone governments dither, the more lenders doubt whether their promises to save Greece are worth anything. Each time politicians blame “speculators” (see article), investors wonder if they understand how bad things are (or indeed that investors have a choice). Euro-zone leaders initially refused to seek IMF help because it would be humiliating. Their ineptitude has done far more than their eventual decision to call in the IMF to damage the euro.

This political and economic failure leads to the third Greek warning: that contagion can spread through a large number of routes. A run on Greek banks is possible. So is a “sudden stop” of capital to other weaker euro-zone countries. Firms and banks in Spain and Portugal could find themselves shut out of global capital markets, as investors’ jitters spread from sovereign debt. Europe’s inter-bank market could seize up, unsure which banks would be hit by sovereign defaults. Even Britain could suffer, especially if the May 6th election is indecisive.

What then is to be done? The mounting crisis—and the fact that Greece will almost certainly not pay everybody back on time—will renew some calls to abandon it. That would spell chaos for Greece, European banks and other European countries: the effect would indeed be Lehman-like. Hence the necessity, even at this stage, of a show of financial force, linked to the construction of a stronger firewall between Greece and Europe’s other shaky countries. The priority for European policymakers is to do the same as governments eventually did with the banks: to get ahead of the crisis and to convince investors that they will spend whatever is necessary.

…and the expensive way back

The economics starts with the politics. Europe will not stem this crisis unless its decision-making apparatus is overhauled and Germany radically changes its tune. Mrs Merkel needs to go on German television and explain to her people what is at stake—laying out how much Germany has gained from the euro and what it has to lose from a cascade of chaotic sovereign defaults. Germans need to understand the risks to their banking system and their prosperity. They need to understand that stemming Greece’s debt crisis is less an act of charity than of self-interest. However unfair it seems—and the frugal Germans are as furious about the profligate Greeks as the rest of the world was about bankers—a bail-out is justifiable on the same logic: doing nothing would cost them even more.

The resolve cannot stop at Germany’s borders. Financial markets have no idea who is in charge. Europe’s Byzantine decision-making structure does not help but Germany needs to ensure that decisions are reached fast, that Europe speaks with one voice—and that co-ordination with the IMF is smooth. As a way to convince financial markets that the political weather has changed, the euro zone should set up a single crisis-management committee, with the power to take decisions.

Political resolve won’t work unless the underlying economics make sense. The first test of this is the Greek package. In return for fiscal and structural adjustments that give the economy a hope of stabilising its debts, this must provide enough money to prevent a forced default. Up to €150 billion may be needed over the next three years—better to err by offering too much. But the firebreak between Greece and the other embattled sovereigns of the euro zone is even more important. In economic terms, that should not be too hard to justify. Despite their problems, no country other than Greece is manifestly bust. Portugal is in the greatest danger, but it has a better history of fiscal adjustment which, under plausible assumptions, could allow its debt to stabilise at a manageable level. Spain and Italy could be made insolvent by a long period of high interest rates. But none has the near-inevitability of Greece.

Europe’s policymakers must make those distinctions clearer. The vulnerable economies must step up the reforms they need to rein in deficits and boost growth. Portugal, especially, needs action. The European Central Bank should demonstrate that it has the tools to maintain liquidity even if there is panic. Euro-zone governments should pre-emptively create inter-governmental liquidity lines. Thanks to extraordinary incompetence, Europe’s leaders have almost ensured that the Greek rescue failed before it began. They are paying for that today.

http://www.economist.com

The cracks spread and widen Panic about the Greek government’s ability to repay its creditors is infecting other euro-area countries’ sovereign debt.

AFTER simmering for months, the Greek sovereign-debt crisis has boiled over. The promise of a rescue by the IMF and the country’s euro-zone partners, worth €45 billion ($60 billion) or more, is no longer enough to persuade many private investors to hold Greek public bonds. Opposition to the bail-out in Germany meant that market confidence had all but vanished by April 27th, when Standard and Poor’s (S&P) slashed its rating of Greek government bonds to BB+, just below investment grade. The rating agency also lowered its rating on Portugal, to A-; a day later it downgraded Spain from AA+ to AA.

In keeping with its practice when rating bonds as junk, S&P gave an estimate of the likely “recovery rate” should the worst happen. It said bondholders were likely to get back only 30-50% of their principal were Greece to restructure its debt or to default. That prompted panic in bond markets. The yield on Greece’s ten-year bonds leapt above 11% and that on two-year bonds to almost 19% at one point on April 28th. Portugal’s borrowing rates jumped, too (see chart 1). At those rates, the racier sort of hedge fund might still be prepared to gamble on Greece paying back its debts at face value, but mainstream funds are abandoning the bonds in their droves. The speculators blamed by officials for precipitating the crisis may now be the only people willing to take a punt on Greece.

Had the rescue been swift and squabble-free, there was a chance, albeit slim, that private investors might have rolled over their existing holdings of Greek debt at tolerable interest rates. That Greece’s would-be rescuers may not after all stump up the money they promised is one of the risks that bondholders are loth to bear—though Germany may now approve its share of the bail-out by May 7th (see article). Another is that Greece will not be able to stomach the programme of budgetary and economic reform which the IMF is due to set out in early May, and on which the euro-zone rescue funds will depend.

A third concern is that even if the programme runs smoothly, the debts that Greece will continue to rack up will be too great for its feeble economy to bear. Earlier analysis by The Economist suggested that Greek government debt would rise to 149% of GDP by 2014 even if its deficit reduction went well. It assumes that Greece could sustain a brutal reduction in its primary budget deficit (ie, excluding interest costs) of 12 percentage points. Even that relied on an interest rate of 5%, roughly what euro-zone partners have agreed they will levy on Greece, on all new borrowing and on maturing debt. If interest costs are much higher, the government will have to find extra savings elsewhere. The deep cuts will only prolong Greece’s recession. Wages will have to fall if the country is to regain the cost competitiveness needed for a recovery. Both influences will push down nominal GDP for a while and make crisis management all the more difficult.

The scale of the task and the bungling of the rescue make the bond market’s capitulation seem natural. Greece needs so much money that the only thing standing between the country and default is open-ended funding from the IMF and the rest of the euro area. The €45 billion fund announced on April 11th would be enough to cover Greece’s budget deficit and repay its maturing debts (including the €8.5 billion that falls due on May 19th) for the rest of 2010. But Greece may need as much again in 2011 and still more thereafter. In an average year, Greece has to refinance around €40 billion of its debt (this year, would you believe, is a mercifully light one for redemptions). Add to that the €70 billion or so of fresh borrowing that may be needed to cover Greece’s cumulative budget deficits until 2014 and the scale of a credible rescue fund becomes clear.

Yet Greece’s would-be rescuers may feel they have little choice but to press on with the bail-out. A default that would cut the value of Greek public debt by a half or more would cripple the country’s banks. (S&P has also downgraded four of them to junk status.) It would also spark a wider financial panic in Europe. Around €213 billion-worth of Greek government bonds are held abroad. The Bank for International Settlements (BIS) estimates that foreign banks’ lending to Greece’s government, banks and private sector was €164 billion at the end of last year. How much of this is public debt is unclear. But if half of the foreign holdings of government bonds are held by banks, and if each country’s banks owns those bonds in proportion to their total holdings of Greek assets, then perhaps €76 billion is held by euro-zone banks (see table 2).

Euro-zone countries might be tempted to let Greece default, force non-bank investors to take a hit, and use the funds earmarked to rescue Greece to fortify their banks instead. That would cost perhaps €53 billion if, as S&P fears, a restructuring of Greek debt resulted in losses of as much as 70%. That may look small next to a rescue fund. But if Greece defaulted it would still rely on its EU partners to fund its budget deficit, which will take time to shrink from the 13.6% of GDP it reached last year. It seems there are no longer any options for Greece that will not cost its partners a lot.

The risk of contagion

Other countries may now need a helping hand, too. The hope that Greece’s problems could be contained now seems faint. There is growing anxiety about the poor state of public finances in Portugal, Ireland, Italy and Spain. Each has some combination of big budget deficits and high public debt, though none is as financially stretched as Greece. But their deeper problem stems from a decade when wage growth ran far ahead of productivity gains. Stuck in the euro, they can no longer cure that malady by devaluation. The only remedies are a period of wage restraint combined with structural reforms aimed at boosting productivity. These will take time, as well as political will, to put in place. The danger is that restless bond investors will not wait.

Portugal is first in the markets’ sights. Its ten-year bond yield rose to 5.7% on April 28th, the highest for more than a decade, in the wake of the S&P downgrades and the anxiety about the size and timing of the Greek bail-out. A week earlier its yields were below 5%. Portugal could be forgiven for feeling picked on. Although its budget deficit last year was an alarming 9.3% of GDP, that was lower than Greece’s. Its public debt, at 77% of GDP last year, is less scary too. That is, in part, the result of a programme to slash the deficit in the years before the global financial crisis struck, and gives Portugal’s government a credibility that Greece lacks. On April 28th its prime minister, José Sócrates, said he and the opposition had reached agreement on speeding up an austerity programme.

Yet Portugal shares three weaknesses with Greece. First, its economy is small (smaller, indeed, than Greece’s), accounting for 2% of euro-area GDP. It offers investors very little diversification. Those who want safe claims in euros can simply lend to Germany or France, and save themselves any worries about Portugal’s economy and public finances.

A second weakness is competitiveness. Greece at least had a boom after it joined the euro in 2001. Portugal seemed to exhaust the benefits of the euro before the currency was born. It grew healthily in the late 1990s as its interest rates fell to converge on Germany’s in the run-up to the euro’s creation. But it has never recovered convincingly from the downturn that followed. GDP grew by an annual average of less than 1% between 2001 and 2008; productivity growth was weak. Nominal wage growth of 3% a year further undermined competitiveness.

Portugal has got by on a drip-feed of foreign capital. Its current-account deficit averaged 9% of GDP in 2001-08. The cumulative impact of those deficits is behind the third weakness it shares with Greece: the foreign debts that its firms, households and government have run up. The IMF reckons that Portugal’s net international debt (what residents owe to foreigners, less the foreign assets they own) was 96% of GDP in 2008, an even higher ratio than Greece’s (see chart 3).

A good chunk of the gross debt is held by foreign banks: The BIS puts the figure at €198 billion at the end of last year, around 120% of GDP (see table 4). The bulk of this has been borrowed by homeowners and businesses. The debt has to be rolled over from time to time, which makes Portugal, like Greece, vulnerable to a sudden change in sentiment. As with Greece, the bulk of public debt is held abroad and the country’s low saving rate means it too depends on foreign buyers of fresh debt.

Could contagion spread further? Spain looks most at risk. Its dependence on foreign finance is on a par with Greece’s. Spain’s public-debt burden, at 53% of GDP last year, means its fiscal position is among the least worrying of all rich countries’ (though an eye-watering deficit means that burden is rising fast). The country’s biggest task is to convince foreign investors that its economy will revive without further infusions of credit. Though Italy has a big public-debt burden, it can hope to rely on domestic savers to buy its government bonds. Its net foreign debts and current-account deficit are fairly small by rich-country standards. Much of the Irish assets held by foreigners are factories and offices, rather than bonds and loans, so Ireland is less prone to a sudden stop of overseas finance. It also has a good record of putting its public finances right.

Do the rumblings in Greece signal a wider retreat by investors from sovereign debt? Defensive Eurocrats point out that the public finances of the euro area as a whole are no worse than America’s. The IMF reckons that America’s net public debt will be 70% of GDP this year, against a euro-zone average of 68%. But the zone is not a single fiscal entity and investors are wary of countries whose finances or growth prospects are worse than average.

America has the great advantage of issuing the world’s reserve currency. In crises, scared investors rush into American Treasuries, which are prized for their liquidity. That is why Treasury yields fell this week as Greece’s soared. That hunger for American assets has lifted the dollar against the euro (and the yen, sterling and the Swiss franc) since the start of the year. That at least is some comfort for members of the euro zone. When countries accounting for more than a third of its GDP are struggling in export markets, that is exactly what they need.

http://www.economist.com

Neither a borrower nor a lender be "The prospect of a bail-out is causing resentment in both Germany and Greece"

ANGELA MERKEL’S political credibility has not yet been downgraded to junk status, but the past few days have done it no good at all. A few weeks ago the German chancellor was basking in plaudits for taking a hard line against a European bail-out of Greece. That was before George Papandreou, the Greek prime minister, bowed to the inevitable on April 23rd and asked for the €30 billion ($40 billion) loan pledged by Greece’s euro-zone partners, of which Germany’s share is about €8 billion. A further slice, of perhaps €15 billion, may come from the IMF.

Now Mrs Merkel is under fire both from those who had praised her and from those who now blame her for dragging out the rescue, further destabilising financial markets and raising the ultimate cost of the bail-out. Reported politicians’ estimates of the whole bill have soared to €120 billion and far beyond, with a correspondingly greater contribution from Germany.

Many Germans feel they are being forced to choose between two basic principles of their post-war economic order: economic stability and integration within Europe. They gave up the D-mark in 1999 on the understanding that the euro would be equally stable and that German taxpayers would not have to pay for other members’ mistakes. The impending bail-out of Greece—and perhaps later of Portugal and even Spain—would mean the end of that bargain. A Greek bail-out would no doubt face a challenge in Germany’s constitutional court. But to withhold aid would endanger the currency and rattle the banks, some of them German, with billions of euros’ worth of Greek debt on their books.

The crisis could not have come at a politically more awkward moment. On May 9th elections will be held in North Rhine-Westphalia, Germany’s most populous state. There, a coalition of the Christian Democratic Union and the liberal Free Democratic Party, the same alliance that Mrs Merkel leads in Berlin, is fighting an uphill battle to remain in office. A loss would cost her government its majority in the Bundesrat, the upper house of the legislature. But the perception that she is dragging out the process to avoid irritating voters is also damaging her credibility both at home and abroad.

Now the process seems to have shifted into higher gear. On April 28th the chiefs of the IMF and the European Central Bank met German parliamentary leaders in Berlin. The finance minister, Wolfgang Schäuble, says the government could agree on legislation by May 3rd and get it through the parliament by May 7th. Voters in North Rhine-Westphalia will then decide whether to punish Mrs Merkel.

If Germans resent having to bail out the Greeks, the Greeks dislike the terms on which the rest of the euro zone and the IMF will come to their aid. The official jobless rate has risen to more than 11%, but that fails to take into account many women reluctant to register as unemployed.

Things are about to become more difficult. A three-year reform programme being put together by the IMF, the European Commission and the ECB aims to cut the budget deficit from 13.6% to 2.7% of GDP in just three years, an ambitious target in a shrinking economy. A new pensions law, which is due to be adopted in May, will raise the retirement age for both men and women and reduce the pensions paid by state-controlled corporations. Applications by civil servants to take early retirement under the existing scheme have already jumped by 30%.

The overstaffed public sector will be severely pruned. No one is certain how many jobs will go. But if the programme is rigorously implemented, more than 100,000 Greek public-sector workers will be put out of work by 2013—by a government that came to power promising “more social protection”.

So far, resignation not fury has marked street protests organised by trade unions and the Greek communist party. Fortunately for Mr Papandreou, his Panhellenic Socialist Movement, known as Pasok, dominates both ADEDY, the umbrella public-sector union, and GSEE, its private-sector partner. But the austerity measures the government adopted before the crisis reached boiling point—civil service pay cuts and a hiring freeze—are only just beginning to bite. Infighting in both unions is on the rise; small private-sector unions have already broken ranks and other hardliners are likely to gain ground.

Opinion polls suggest more than 60% of Greeks oppose the government’s decision to call in the fund. The IMF’s reputation for imposing harsh reforms, along with the partial surrender of sovereignty to an American-based institution, seems bound to make Greeks cross. Criticism of Germany, by comparison, is muted.

http://www.economist.com

Budaya Palembang

Seni dan Budaya

Sejarah tua Palembang serta masuknya para pendatang dari wilayah lain, telah menjadikan kota ini sebagai kota multi-budaya. Sempat kehilangan fungsi sebagai pelabuhan besar, penduduk kota ini lalu mengadopsi budaya Melayu pesisir, kemudian Jawa. Sampai sekarang pun hal ini bisa dilihat dalam budayanya. Salah satunya adalah bahasa. Kata-kata seperti "lawang (pintu)", "gedang (pisang)", adalah salah satu contohnya. Gelar kebangsawanan pun bernuansa Jawa, seperti Raden Mas/Ayu. Makam-makam peninggalan masa Islam pun tidak berbeda bentuk dan coraknya dengan makam-makam Islam di Jawa.

Kesenian yang terdapat di Palembang antara lain:

• Kesenian Dul Muluk (pentas drama tradisional khas Palembang)^[6]
• Tari-tarian seperti Gending Sriwijaya yang diadakan sebagai penyambutan kepada tamu-tamu, dan tari Tanggai yang diperagakan dalam resepsi pernikahan
• Lagu Daerah seperti Dek Sangke, Cuk Mak Ilang, Dirut, dan Ribang Kemambang
• Rumah Adat Palembang adalah Rumah Limas dan Rumah Rakit

Kota Palembang juga selalu mengadakan berbagai festival setiap tahunnya antara lain "Festival Sriwijaya" setiap bulan Juni dalam rangka memperingati Hari Jadi Kota Palembang, Festival Bidar dan Perahu Hias merayakan Hari Kemerdekaan, serta berbagai festival memperingati Tahun Baru Hijriah, Bulan Ramadhan, dan Tahun Baru Masehi.

Makanan Khas

Pempek merupakan makanan khas Palembang yang telah terkenal seantero nusantara

Pindang ikan patin khas Palembang, rasanya pedas, asam, dan gurih

Kota ini memiliki komunitas Tionghoa cukup besar. Makanan seperti pempek atau tekwan yang terbuat dari ikan mengesankan "Chinese taste" yang kental pada masyarakat Palembang.

• Pempek
• Tekwan
• Model
• Laksan
• Celimpungan
• Mie Celor
• Burgo
• Pindang Patin
• Pindang Tulang
• Malbi
• Tempoyak
• Otak - otak
• Kemplang
• Kerupuk
• Kue Maksubah
• Kue Delapan Jam
• Kue Srikayo

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