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Strategies & Market Trends : Asia Forum
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To: Tommaso who wrote (2445)3/1/1998 8:34:00 AM
From: Michael  Read Replies (1) of 9980
 
Tomasso,

Re: Japan. I'm not sure the comparison with the US in the 30's really holds. Hoover's new deal came after a several years of vicious contraction which dissipated most of the credit and pricing anomalies that built up in the 20's. Japan has never allowed that to happen. They have had the lowest effective interest rates in the world for the last seven years and their economy has gone nowhere.They also have huge Government deficits. While further deficit spending would produce a feel good factor which would keep the game going for a while longer. I don't see it solving their problems.

Malaysia is actually the best of the "wounded" tigers on a straight financials basis, but there are still major problems there which are not yet publicly acknowledged. Add to that the idiocy shown by some of the leadership at the beginning of the crisis and even recently over the issue of opening up ownership of companies which had been hitherto been restricted to Malays and you've got further reasons for lacking confidence.

Indonesia, well above 5500 Rup/USD most companies are bankrupt. That alone would be a critical issue but then you have the games that Suharto is playing with the IMF. People are already starving in some places there and that situations getting worse with no solution in sight.

Thailand and Korea have more social cohesiveness and discipline and they are better bets fro m that point of view but my worry there is that if this merry go round is started off again by bad news from Indonesia, Japan or China then they will be dragged along for the ride.

When I put these together I see a very negative outlook for the region. The recent bullishness though has made me wonder if I am not being unduly depressive in my reading of the situation. Anyone see reasons to be more positive.

Michael
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