My goodness the things you discover undr the rocks Tom. Good morning to you dear fellow. Are you corporeally in Hong Kong or in Ardmore, Okla.?
Well,it looks like the G-7 people all took their marbles home with them and didn't want to play with each other.
You might be interested in Wayne Cimi's latest. I take the opportunity to quote Wayne, "The global financial crisis continues unabated. There's almost no reason to believe that the situation has been stabilized. There is a growing realization that the full impact on the U.S. will be felt in the quarters to come. BIS reports indicate that Europe may be more effected by the global credit crunch than the United States. European banks have more exposure to emerging markets ($425 billion) than their U.S. counterparts ($177 billion). Either way, expect more taxpayer bailouts of global financial institutions and more easy money from central bankers. The next stop on the bailout tour is Brazil! The election is coming up in early October. Expect the package and conditions to be announced soon after. It's probably going to be an expensive one ($30 Billion or more). If you're a middle class taxpayer hide your wallet. If you're Brazilian just plain hide. The conditions that have accompanied these bailouts have often turned out worse for the recipient country than they bargained for. Somehow the creditors keep managing to get the best of the bargain. Does anyone besides me get a little upset by this?
For a better understanding of the crisis I recommend that you read the following articles.
Japan's Boom and Bust - by Jeffrey M. Herbener
Clinton's Plan - by Llewellyn H. Rockwell, Jr.
On the same issue, here's the thoughts of M.I.T. economist Paul Krugman. (talking about Asia's experience)
"How would our own financial institutions look if we experienced a comparable loss of investor confidence? Scaling up Thailand's experience to the size of the U.S. economy, it would be as if the roughly $200 billion per-year inflow of foreign investment that currently helps stabilize our financial markets were next year to become an outflow, not of $200 billion, but of a trillion dollars.
How many loans that looked reasonable at the time would suddenly become "non-performing"?
How many seemingly sound banks would be defunct? "
He makes a very interesting point in that statement. Without predicting a bust, he hints that the U.S is in a bubble similar to the ones that have now burst in Asia. We have high financial asset values, a low personal savings rate, significant consumption borrowing, significant borrowing to finance the purchase of financial assets, consumption based on rising asset values, and unsustainable amounts of foreign inflows that are required to keep it going. This situation is widely recognized almost everywhere except in the United States (at least publicly). Top officials from China and Japan recently called the U.S a bubble and have pondered diversifying out of dollar reserves. The European press has been writing about the situation for more than year. I guess middle class American investors will be the last ones to know".
Well. It's going to be in interesting month. Wayne's url is..http://members.aol.com/WCrimi/oct98.html
A further thought perhaps...
At that I was speaking to one of my oldest Asianist friend over the week end, a woman who has been involved with Asia for 60 years and was married to the great moderinist Chinese painter. She said, "The Japanese, I am afraid, have squandered their hard earned national patrimony and they will never again be a power in the world. Their day is over. They're finished in the world of affairs. You see. If it is not written in a book somewhere they don't know the answer because they are absolutely incapable of creative opinion." She sighed heavily. "It's all... all a very sad and terrible waste isn't it?"
My best to you,
Clark
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