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Technology Stocks : Intel Corporation (INTC)

INTC 34.36

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3:58 PM EST

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To: Lee Penick who wrote (42143)	12/13/1997 8:31:00 AM
From: Paul Fiondella	Read Replies (3) of 186894

The macro economic situation isn't Intel's fault But then again economics is not a matter of morality. Its more like death in nature. Economics is the dismal science. (Did I say that? I think I have to lighten up. It must have something to do with helping someone prepare a technical brief for the Supreme Court) Back to the situation in Korea. There is apparently an emergency G7/IMF meeting in Europe this weekend. (European banks are heavily exposed in Korea.) The worst case scenario is a Korean default. All the bad loans of all the businesses in Korea get written off. Lots of western banks take a big hit. In almost any scenario Korea goes into a sharp economic decline and a period of domestic discontent. It cease to buy foreign capital goods (AMAT). Japan loses a major export market and finds tougher competition. People in Washington worry about the Korean government and its instabilit (say like Israel.) Russia is the weakest link in Europe. The deflationary crisis could spread there in the form of a government unable to pay any of its bills. After Yeltsin there is nothing but chaos. Russia has been in this economic situation for some time, its government living hand to mouth on IMF loans (and its government/mafia socking it away in Swiss bank accounts). It hasn't been able to pay its workers back wages or stimulate production. Germany's expansion was also based on exports which many be constrained now by the weaker Asian currencies and competition. Europe never really recovered from the last recession. So that leaves the US as the engine of growth. Greenspan certainly isn't going to stimulate this economy to pull Asia out of its problems through an Asian export driven recovery. We have enormous levels of foriegn debt. We face a decline in demand for our capital goods--- our chief exports, which will hit California and the high tech industry. We face a decline in manufacturing jobs centered on competitive Asian export industries like autos. This all means a decline in growth next year in the US. However we have our own special problems which no one wants to discuss in how the current US "expansion" was accomplished. It was done with credit to consumers on a scale never seen before. IF we continue to shoot for growth based on further consumer credit expansion then watch out. Unfortunately the stock market tends to anticipate these things. ================== I'll shorten my answers in the future.

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