OWW, the point about technology upgrades going forward, seems to me, is very important to factor in.
We are already well on our way to understanding some key aspects of the Japan situation as well as what is transpiring with the SEA Tigers. The most Mystic E! and you were doing a pretty good job of tagging the major currency effects and some of the macro-effects on earnings.
So, perhaps some questions (No "fast" answers needed)
1. How severe will the capital limitation be for the affected countries. (Prelim: rather extreme, actually; they are BEGGING for IMF cash)
2. Where will available capital be concentrated? (Prelim: flat-out rescue jobs, frankly, ala the S&L bailout in the US.. this is expensive -- perhaps severely so)
3. If any capital remains, what will be funded in the line of "projects" (Prelim: "Core" projects, Infra-structure, esp. So, roads, airlines, comm, harbors, airports, dams, power plants; secondarily, "industrialization" projects: steel mills, mines, auto plants, and perhaps especially -- those which require a lot of labor)
4. So, will there be enough capital left over from bailouts, etc to fund the core projects needed to keep the high growth rates intact? (Prelim:That's not clear. There are negotiations for buyouts of the local financial institutions by foreign--largely U.S.-- entities. In some cases a U.S. parent company may fund a plant, or a joint venture partner may do so... the evidence thus far is that even IBM won't pay both halves of joint ventures where the Asian partner is now strapped. So -- inconclusive)
5. Are there any other factors? (Prelim; probably more than we can even speculate about: Major one: If you are Asian, the cost of your INPUTS just went up enormously; your cost of construction just went up significantly; your cost of foreign services is now prohibitive, and so forth)
Conclusion: The story is more complex than we care to admit. Even the alleged downside of the strengthening dollar isn't clear beyond all question.. The Japanese Yen strengthened from 360 to a dollar all the way to under 100 to a dollar while the Japanese economy continued to soar, and Japanese companies remained competitive.. For quite some time, it is likely that the strong dollar is a Positive, not a negative.. ((As a Minimum because it keeps interest rates down).. But we have many discussions ahead, IMHO... TSO |
