John, I've got to side with Eddie, at least partially, on this issue. A lot of the economic growth in the Tiger economies was an illusion based on currency arbitrage rather than real economic growth. In some respects it was like the real estate/S&L boom that hit this country in the eighties.
Second, regardless of whether a company has direct Asian exposure, it certainly has indirect exposure. For example, if company A does quite a bit of business selling goods to Asia, and company B sells equipment used in company A's plants, then company B will experience an indirect Asian exposure as company A slows down it growth plans. If the slowdown is severe, company B may have to begin laying people off.
I believe the key to restoring the Asian economies is a thorough revision of their economies. They must become open, which means abandoning the keritsu paradigm in favor of competition. They must allow foreign competition for goods and services and food stuffs like rice. They must allow for the free flow of capital. But first and foremost, they must restructure their banking system.
And Japan is the key. It is the slowness of Japan to deal with these structural issues that is weighing the markets down. I am suggesting more than just the typical Keynesian package of economic stimuli. There needs to be a cultural overhaul.
On the positive side, if Japan develops the political will for these reforms, the markets can turn very quickly,
TTFN,
CTC |
