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Pastimes : Ask Mohan about the Market
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To: Zeev Hed who wrote (12311)12/26/1997 9:24:00 AM
From: geewiz  Read Replies (2) of 18056
 
Zeev,

while your knowledge to the asian crisis is a lot better than most of us on this thread, I believe our views differ in the magnaitude of the crisis. It is most assuredly not a "Mexican" crisis. It troubles me that many talking heads on the television reassure the investing public that we have seen this before.

1 Mexico got into a liquidity crisis defending the peso. SEA is in a solvency crsis due to overconstruction of manufacturing capacity funded with international money for products that have reached saturation in the market.

2 This overcapactiy will have a cascading effect on other governments not just banks. It is likely to become a political crsis in several SEA countries. Indonesia is a powder ceg waiting to blow up with the Chinese and Muslims at odds in the economic specturm. We are also very poorly informed as to the extent of the Chinese surplus inventory and bank insolvency.

3 The scope of the insolvency is hard to imagine at this time but suffice it to say it has not been wittnessed before, and the response has so far been underwhelming. From my limited understanding it's as though there has been some successful intervention to prevent the scope of the problem becomming evident. Intervention NEVER works. This is postponement of the final accounting and will make the future crsis even worse. The worlds' most powerful banks and treasuries are behind this move so it may work for a while, that's the part that is hard to gauge. It might work for another few quarters.

No need to respond to my post, I am only trying to clarify on how the views of the thread differ. Always enjoy your posts.

Happy Holidays to all!

art
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