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Gold/Mining/Energy : Gold Price Monitor

GDXJ 110.89

+1.8%

Dec 10 4:00 PM EST

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To: Mark Hutnick who wrote (3843)	12/5/1997 10:24:00 AM
From: Bill Ounce	Read Replies (2) of 116808

Nando News Article -- Former Fed governor predicts Wall Street correction nando.net WASHINGTON (December 4, 1997 11:41 p.m. EST nando.net) - The U.S. stock market is headed for a correction as competition sparked by Asia's monetary crisis forces American firms to slash prices, former Federal Reserve governor Lawrence Lindsey predicted on Thursday. "The credit crunch that is now occurring in Asia is forcing the liquidation of inventories and output at any kind of price that can be gotten on the market," Lindsey said at a panel discussion sponsored by the American Enterprise Institute. [...] Lindsey cautioned that such developments should not necessarily be seen as a signal to pour money into bonds, because attempts to remedy the deflation scenario could eventually give way to inflation. "It's hard for me to see governments being so masochistic as to continue deflationary policies," Lindsey said, adding that governments would ultimately respond by printing currency. "That's not the kind of environment under which I would want to lend to anyone -- including Uncle Sam -- at 6 percent," Lindsey said, referring to the yield on the benchmark U.S. 30-year Treasury bond. [...] It is hard to see how you can justify an unchanged exchange rate in a situation in which currency is being created so rapidly," Lindsey said. "How will they be able to defend the yen? It will only be by liquidating U.S. bond holdings." [...]

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