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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: see clearly now who wrote (554)9/3/1998 11:41:00 AM
From: Chip McVickar  Read Replies (1) of 3536
 
Arnold,
I am in complete agreement with you...
The spector of debt leverage throughout the world [at every level] is an
extraordinary accomplishment. It has increased significantly the wealth
and standards of living for much of the technologically advanced countries
and has fostered emerging countries by broadened their capital base.

However, it has also created an unstable international financial system
that creates volitility and requires a political willingness to participate
in balancing this volitility. The G-7 have been willing to do just that,
adjust economies and balance of payments. But, with the increased wealth and
success of free-market players [hedge funds] the balance has been altered
to a FAR GREATER DEGREE THEN EVER BEFORE.

The next question is wheither the unwinding of this debt leverage can be
accomplished without imploding the "floating rate system". Greenspan
is already on record as saying the 'achiellis heel of our modern financial
system maybe the volitility of cross-boarder short-term markets'.

I am beginning to think that Greenspan and his counter parts cannot
stop the systemic imbalances of debt to GDP, social programs and sustain
the economic growth required to fund these debts and also defend the
"floating currency agreements".

I do believe that Henry is correct in his assesment in post-551 #reply-5661573
The US will weather these problems far better then any other economic
and political structure. If we have a "money meltdown" the consiquences
will most likely be a short-term confussion and another Brenton Woods
conference that will within 3-6 months establish new currency agreements.

I am not a gold bug or hard currency advocate, but I believe some method
of regulatory board must be developed to counter the free amrket players
and eventually create a more sophisticated system of currency balances.

I do not believe there will be anything more then a protracted and serious
recession ending with a continued and prolonged cycle of growth.
Most likely there will not be a depression in the western world.
However, Japan find it unavoidable unless they reach agreements shortly.
Chip
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