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Strategies & Market Trends : Asia Forum
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To: Thomas Haegin who wrote (1006)1/17/1998 12:23:00 PM
From: Worswick  Read Replies (3) of 9980
 
My dear Thomas don't be depressed. I didn't mean to depress you. Things go in cycles you know. I look at this ASian deflationary scenario as a good thing. Part of a cycle.

I do wish you could have read the hugely researched and detailed New York Times "expose" of both the Bhutto and the Suharto famlies. My god, Ms. Butto had a Swiss company contract to do a study of how the Pakistani government could collect more efficient customs revenues. The Bhuttos then took 10% of the fees acrued to the Swiss company in fees... as a bribe for giving them the contract. We are living in times of great ingenuity.

Looking at the crisis in Asia it is a good thing for the people of Asia that they move out of the banana republic phases of their history. Send the Suhartos off to Palm Beach where they can stay warm.

As far as world deflation in concerned it would seems to me that Europe has been in a deflation for 20 years. Think about the huge rates of unemployment in western Eruope and the countries in Europe who have absolutely wrung out any extra margins they could as more and more of the GNP slips into the government's hands via entitlement programs. Europe has practically institutionalized deflation.

The same thing has been evident in America since, perhaps, 1990 when we went thorugh the deflationary wringer of the great real estate bubble bursting and then winding down of the S&L crisis. Here in America it is no joke to say that huge numbers of men and women have been layed off from well-paying jobs - they haven't gotten anything like their old jobs back - but in the existing financial boomlet they have watched their children get their jobs instead. Every other year I go to the west and see places that were packed in the 1980's almost completely empty of people. Hotels empty. Restaurants. Think about Texas. I used to go to Houston and ask cab drivers what they once did. Nobody ever said, "Boy. I could hardly wait to grow up so I can drive a cab in Houston."

So don't be depressed. Europe, particularly Europe, has been living in deflationary times for decades. Every other year I go climbing in Europe and I am struck how tightly the people are being squeezed. It usedt to Europe and bought quality clothes, climbing equipment, etc. Now what is offered and bought is the absolutely cheapest sort of thing you'd find in the lowere end ofthe retail establishments here. I don't mean for this to sound shirty. It is merely an observation about the price that has been paid in Europe by people in the great unremarked deflation.

So. Don't be depressed. It is just Asia's turn.

Europe and the US are both well down the road of deflationary contraction despite what the economists say. We are near the bottom and for us it is onwards and upwards. IMHO.

This started out to be a short note. Sorry. My usual convoluted thinking leading off into the swampo.


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