Where There's Smoke...

This is the sort of political gossip that makes the intrigue all the more fun. This is not to suggest that this is not a serious matter if it were to be true. Rather, can the President really be that stupid to cave into the pressure if it is there? The old saying (or is it a cliche now) that where there is smoke, there is fire might ring true here.

It seems that the rumor mill has been running in earnest over the past couple of weeks that the pressure is on the Minister of Finance (and doubling as the Coordinating Minister of Economic Affairs), Sri Mulyani Indrawati, as the global financial crisis unravels and seemingly unravels one of Indonesia's biggest corporate groups. The rumor goes Aburizal Bakrie, who just happens to be the Coordinating Minister for Peoples Welfare, called and the Finance Minister said, No!

The issue seems to be Mulyani's refusal to entertain the idea of a bailout for the Bakrie group. Fair enough, it is a little bit rude to create a mess and then expect someone else to come in a clean it up with a sweetheart deal. However, the government is likely to buy into the Bakrie companies on the market and make some serious cash on the deal. The fundamentals of the Bakrie companies involved are reportedly pretty solid in terms of the assets they hold.

The problem is that they leveraged their premier shares against a USD 1.2 billion loan. Not such a problem except that the bottom fell out of the market and thus the leveraged shares are no longer worth what they once might have been. Now, that there are loans due and others due real soon, the pressure is on.

Andi Mallarangeng, one of the President's spokespeople, has said he is surprised by the gossip and that there is no truth to it. According to Mallarangeng, the Finance Minister has "the full backing of the President".

Does this put an end to the smoke and put out the fire? I suppose we will find out soon enough.