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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Henry Volquardsen who wrote ()9/22/1998 11:59:00 AM
From: Henry Volquardsen  Read Replies (2) of 3536
 
To the thread:

Keep your ears open the next few weeks. There are rumours in the markets of a 'big
package' being put together by th G-7 to put some sort of floor under global risk
generally, and emerging markets specifically. There are no specific details as yet but the
sources appear credible. Timing appears to be after German elections and the Fed's
meeting. Brazil appears to be the near term target. Russia, however, does not appear to
be high on the priority list.

From a strategic perspective this makes sense. The speculative community was hurt
badly by Russia and Malaysian currency controls. They are not in as strong a position as
they were 6 months ago. So the timing is right for a concerted defense. But even given
that the G-7 need to select the right point to set their line of defense. Russia is a basket
case and indefensible given its current situation. Brazil on the other hand has a real and
functioning economy. Yes they have problems but they are amenable to reform. Brazil
would probably be the G-7s best target for drawing a line in the sand.

FWIW I am not saying yes or no to what ever plan may be in formation. There are not
enough details. But we could be in for some interesting developments. And it certainly
makes sense for the G-7 to try something and I've been expecting them to pick Brazil.
Let's hope it is their Bastogne and not their Alamo.

Henry
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