Monthly Archives: Mei 2013

Tax Regulation Sh*t

Okay. So i’m not going to bitch the government here, or any of their tax regulation. This discussion just will go about the financial market area, focusing in what tax regulation would affect the economy through that sector.

So far, we believe that regulation such as taxes, especially ones that directed to financial transactions would lead the economic growth to decline. Things aren’t much different with if it happens to bank’s financial transactions. Baker and Jorgensen (2012) found the opposite. Their main point is that the raise of the financial transactions costs—through tax regulation by the government—doesn’t always have negative impacts on economic growth. In truth, it can even raise the real growth, though rather slowly, by focusing more to the asset-backed investment, as in “real” form of investment. Well, fundamentally there are four reasons which base Baker and Jorgensen’s (2012) arguments.

First off, things like free riders (or, according to Baker and Jorgensen’s choice of words, noise-traders) and highly informed traders. The raise of the transaction costs can kick out both factors from the game. Money would go to normal investors, they who don’t ride the financial market transactions only to get hands on margin and not dividend, or pay some insider to get crucial information which would put other in disadvantage. The second reason is the real impact of higher transaction costs on the cost of capital (firms or banks tend to lower their capitals if the cost is higher, or so we thought). All this time, we have this perception that higher transaction costs would affect the capital and eventually, the investment moves. But Baker and Jorgensen (2012) found that the case may not be so true.

Truth is, there are quite many firms (or banks) which use most of its retained earnings to enhance their investment moves, not solely by raising their capital. If we recall back to the determinants of investments in order to raise the economic growth, we would find that the cost of capital actually has very small effect in investments. The third reason is that the resources freed up by reducing the volume of trading may actually mean that more resources are available for investment. The main idea is that financial market tends to have unnecessary use of resources, or things can get out of line. Investors used to ignore resources as the main form of investment.

And the last reason would be productive public investment. Where the revenue from the tax will go afterwards? If the destinations are things such as infrastructure, research and development, and education spending, then all will be well. In other words, the revenue would go productive. But if not, then good luck with the tax regulation plans. We may as well just choose between go down in flames or go up in smoke with such case.

But if we’re talking about bank side of view, would it affect bank’s expansion plan in general? Or in broader idea, would it affect banking’s expansion in a country? The answer of that will be found in the next post . . . LOL


Gold Standard Economy : Stagnation in Disguise

Wow. Such fancy title. Even I first thought, “Oh bollocks…”

For starter, i think it’s better before give this eco-blab a shot to dig stuff about gold standard system (the real thing, not what i wrote earlier) first. Just to grab the feeling, you know. So that you can point out my mistakes, ‘cuz I’m definitely going to make some.

Well, it’s not for no reason Nixon decided to write off The Bretton Woods System back in 1971. I’m not going to reminisce of the glory (or rather, gloomy) days here, just to review things a bit. No matter what, the system once failed, and this is the fact that everyone has to coincide.

The thing is, in Gold Standard Economy, Bank can’t release bonds as freely, or permit loans as generously. Central Bank also can’t just print bucks (or in Indonesia, repes) whenever they feel like, because all money must be backed by the same amount of gold. Why can’t they give loans as easy as they normally would? Because all loans must be given only to real sector …….

*to be continued (too lazy to write)

Islamic Money (ecobabbling)

First off, I’d like to state that I based this ecobabbling (lol) with Mr. Ascarya’s late research back in 2010 about Social Value’s Effect Towards Islamic Money Demand in Indonesia (rough translation, the real thing titled as Analisis Pengaruh Social Values Terhadap Jumlah Permintaan Uang Islam di Indonesia).

Here goes my blab . . .

As we all know, we use fiat money as our medium of exchange in Indonesia, as in currency (not demand deposits kind of money). It’s by any means not the kind of money Rasulullah used back in the day (full-bodied money) like dinar/dirham, but well that’s how it is in Indonesia. Many people think that the case for the gold standard system simply does not stack up for past era, much less nowadays. But well, that’s another thing.

We know that Indonesia isn’t officially named oneself as a Muslim Country. Our current President even stated that he finds USA as his second country. Not another Muslim Country, I mean. Thus, we find no reason not to use fiat money and not to insist in using full-backed money (back to the gold standard economy era).

But in the journal that Gustiani, Ascarya, and Effendi wrote about how social values (such as zakat, infaq, sadaqat) affect Islamic Money Demand (both currency and deposits) they include Indonesia’s currency as one of the variable in Islamic Money Demand, while we all know nothing such as Islamic Money (as in currency) in Indonesia. Only the deposits ones (saving/demand/time).

Well, just saying.

Maybe it’s too fast for us to evaluate Islamic Money Demand kinda thing in a country that only holds Dual Banking System at its hands, not Dual Monetary System. Or we can limit the research area only in Islamic Deposit in Indonesia, not Islamic Money in general.

P.S. No offense, dudes. Half of the things i wrote i did that in not so sober state (half-asleep).

Islamic Transactions and Islamic Money

Reading the title, I think one would never get confused about those two terms. But, do we really ?

Sometimes I think people like scholars, researchers, even University Lecturers get tangled between the two concepts and end up throwing some screwed-up logic. Well, forgive me for the rude choice of words, but somehow I feel so pissed (and end up find it rather personal) when the ones who got it wrong are people with great influence for others, like teachers or speakers for example. Because what they said wouldn’t just get through some guy’s head and gone like sand in the sea, but it would last. And worse, perform its domino effect by spreading out all over the planet, which end up getting more people having false perceptions.

Not quite few people think that Islamic money must used in every transaction in order to be called as Islamic transactions. Well, transactions that not crossed Islam’s wires are those that not breaking the Law. That includes any kind of fraud, injustice, forbidden goods (like pigs) and things that break the legitimate of aqd in Islam. NOT transactions that only be held by Muslims, and that every transactions that Muslims have with other people in different religion is not valid, or, in this case, not being Islamic.

As we all know, Rasulullah salallahu alaihi wassalam also had economic activities with Jewish people (in Qainuqa), musyrikin (people who aren’t Muslim), etc. I mean, as long as those transactions never betray Allah’s Law, the light’s green.

People often get confused with perception like : “Islamic economics is every single economic activities held only by Muslims” or things like that.

And thus, they limit Islamic economics’ aspects NOT with the Law, but with their mere presumptions and false opinions.

Bring me back my Lie To Me (Tim Roth, Kelli Williams)

Screw Fox and all its cancellation.

I seriously can’t think one possible reason why show like The Mentalist has way more viewers than Cal Lightman’s LTM. I mean, who can actually resist that pile of bollocks talk from such smartass bonkers like Cal and the gang? The witty genius lead role, the female partner, the badass gang, the family issues, the intelligent way in solving cases, and even the acting… I mean, Lie to Me clearly worked on all those aspects, if not perfectly, then at least brilliantly. If I really have to complain about anything, it would be the unnecessary flings of Cal. *lol

Cal’s characterization is dug deeper and done more brilliantly than Jane’s, for other example. As nutty as Cal appeared to be, we still felt him like a real thing. We could reach the character and totally feel it. While Jane was more like a character from some script, with not as great actors.

Give my back my favourite Bonkers…