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Politics : Formerly About Applied Materials

AMAT 319.51

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Jan 26 3:59 PM EST

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To: Katherine Derbyshire who wrote (23661)	8/31/1998 1:53:00 PM
From: derek cao	Read Replies (2) of 70976

Off topic: Hope this will help: usatoday.com "The problem is that Russia is rich in natural resources, such as oil and minerals. Global commodities prices have been plunging since the Asian financial crisis began a year ago and demand from Asian countries fell. Oil, for example, goes for about $13 a barrel today vs. $20 a year ago. The fear now is that to raise foreign money to pay its debts, Russia could decide to flood the already glutted commodities markets with more oil and minerals. That would cause prices to plunge further and could devastate the economies of countries heavily dependent on commodity exports. High on that list are Canada, Mexico, Brazil and Venezuela. Those countries are important to the USA because they buy enormous amounts of U.S. exports (Canada is the largest U.S. trading partner) and U.S. banks have huge loans outstanding to them. If their economies falter, the United States would feel it fast and hard. Major U.S. banks have about $100 billion in loans outstanding in Latin America, compared with about $8 billion in Russia. Last week, Republic New York Bank and Bank- America announced they had suffered big trading losses in Russia. The Canadian dollar fell last week to a record low of 63 U.S. cents because of plunging commodities prices and the Russian turmoil. And gold fell to a 19-year low of $274.90 an ounce. All of these fears are helping push down U.S. stock prices. And that creates another risk. " How could we get into over production in the first place? IMHO, higher saving in Asia. Could you imagine US have 15% of savings rate? If we do have such higher saving rate here, we will have the same problems down the road after a giant stock market runup and a big crash. Why Asia prospered in the past while they have higher saving rate? My guess is that the money had been used efficiently to build up their infrastructure from scratch. IMHO, now is it the time for those developed Asian nations to focus on more spending than savings. There are limits on how many factories you can build. Clear? Above is my view. What is yours? Derek

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