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Strategies & Market Trends : Bosco & Crossy's stock picks,talk area

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To: Iris Shih who wrote (1935)	10/19/1997 11:45:00 AM
From: Crossy	of 37387

Dear Iris, what disturbs me of Taiwan so much is that it forced its overnight rate to 18% in order to combat devaluation pressures. That's what frightened me. Look, selected European countries had the same problem: Sweden in the early 90ies. It can be solved easily: accomodate, let the currency fall, it won't hurt, even improves exports. Since I'm a montetarist, let me concur that Milton Friedman does not advocate using interest rates because of devaluation pressures from the currency market. Only trust in an economy will do that. Currently Taiwan central bank rate is 18%. This is definitely bad medicine for capital-intensive operations like semi-fabs. Once the central bank will give in, interest rates will decrease to 6-7% and investment in fabs would become sensible again. Pls. bear in mind that the US avoided a 1987 after-crash recession by accomodating and letting the dollar slide. That's what I call far-sighted indeed. A central bank should steer a way instead of exert shocks (quoting Milton Friedman). best wishes CROSSY

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