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Strategies & Market Trends : Asia Forum
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To: Paul Berliner who wrote (5544)8/14/1998 12:58:00 PM
From: Ron Bower  Read Replies (1) of 9980
 
Paul,

Should a government step in when outside forces are putting their economy into chaos? What is the role of government when a disastrous event occurs that will harm the country?

In the US, is it proper for the SEC to stop trading when the market reaches certain levels or should the SEC allow total collapse?
Is it proper for the Federal Reserve Board to set interest rates?
Was it proper for the US to buy yen in an attempt to stop the selloff?
Was it proper for the US to back loans to Chrysler?
Should our government subsidize companies in foreign development?
Are tariffs, subsidies, price supports, etc. to be eliminated?

Government interference in all forms of commerce is common.

Should HSBC be allowed to collapse? 30% of the HSI? Pension funds?
Was the selloff due to poor performance by the listed companies?
Or to a sudden weakening of economic conditions in Hong Kong?
The obvious answer is no. The selloff was panic caused by market manipulation.

They used a small amount of money and bought across the board. No particular company. It put a stop to the selloff and the market has rebounded. If the market is truly worth less than it's current value, it will turn down. If their effort fails, the officials will be damned. If it recovers, they will be praised. Time will determine the wisdom of their actions.

I personally hope the short sellers got burnt.

FWIW,
Ron
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