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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Frodo Baxter who wrote (675)	9/18/1998 2:46:00 PM
From: Lee	Read Replies (1) of 3536

Lawrence, I think a sharp movement to dollar/yen 300 is not so good for the US market. Short the yen, hmmm. I'm finding confidence as I look around that much of the problem is we have a world of followers. Everyone copied the road to prosperity that it has now been left littered with the accidents of those who knew not how to drive. It seems that to invest in a mature or near mature industry is a guarantee to compete in an industry of over capacity. If it's a mature industry, every developing country wants to participate. Yet capacity seems to have its own inertia rule: productive capacity becomes more productive; unproductive capacity is protected; capacity at rest rots (until it's reinvested). Competitive advantage, as has always, comes from innovation and new ideas. Here the US seems to be increasing its lead, faces little competition, and, more importantly, has the freedom from government so to do. Meanwhile the rest of the world seems distracted by economics. To short the yen is a bet on the strength of the US ideas. (Of course I'm preaching to the choir Mr. US Booster.) Moreover, I firmly believe the world will need more dollars to get back on its feet. Yet I think short-term swirling pressures will distort currencies even more than usual. Now we have Senate discussions on Asian trade infractions coming out one side of a mouth saying Asia needs us to consume more. The government may interfere in markets to protect US business. To me this is the worst sign yet. To actually cave in to this industry pressure (rather than lip speak) would be a clear sign to me that we (the US) must also bleed before we take our medicine. Still holding the faith, Lee

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