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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Henry Volquardsen who wrote (367)	7/30/1998 3:35:00 PM
From: X Y Zebra	Read Replies (1) of 3536

I see your point in re: hot money. However, this "hot money syndrome" has a good effect, as for the first time it created a form of discipline forcing foreign governments to be fiscally more responsible. It is true that such discipline can turn around and become dangerous for the illiquidity that you indicate, putting these governments in dire straits, having to go to the US (the lender of last resort), for $$. Where is the right balance ? How do you "force" the foreign governments to behave ? I would vote to let the hot money do their voodoo and within reason "baby" these countries during their cash crunches, making sure that they do not get too attached to the easy money spout.... while I personally do not advocate this "policies", the alternatives are worse. The solution most feasible, given that many of these markets are not neither large enough nor free of corruption to pull themselves of the gigantic messes they get into, would be to a global integrations of their markets, perhaps via the regional pools as Nafta, Mercosur, the Euro etc. (and we have discussed what the risks of these "unions" will be)..... Hard line to walk I guess.

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