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Strategies & Market Trends : Currencies and the Global Capital Markets

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To: Ahda who wrote (1685)	5/26/1999 11:44:00 AM
From: Henry Volquardsen	Read Replies (3) of 3536

Darleen, Meant to respond yesterday, sorry for the delay. What plagued Asia was over asset value in my opinion and external export reliance instead of internal generation of growth. Excessive leverage and the over investment in assets was probably the yin and yang of the same process. So we are probably both referencing different aspects of the same problem. But you bring up another issue that has been one of my favorite soapboxes. Internal growth vs export reliance. I am a strong believer that the emerging markets need to adopt policies that will help build a middle class. The benefits would be several but an important one would be the development of a large enough supply of domestic capital to create a self financing domestic capital market and lessen the reliance on foreign capital. The same amount of capital concentrated in the hands of the wealthy doesn't react the same way. The very wealthy tend to be trans national and much more apt to leave the local market. Middle class investors tend to be more concerned about currency risk and keep their capital where they intend to spend the rest of their lives. A prosperous middle class is vital for a stable economy. The political benefits are also important. Regarding where the people who aren't technically competent going to be employed. That will be a very interesting question. I take it as an article faith that the free market will generate responses as the economy develops. After all it is no different that the situation during the industrial revolution. Many high value jobs were destroyed among artisans and masses of people did not possess the skills needed. In our own time we are already seeing a realization at all levels that technical education is vital and even the goof off kids of the future will be more technically proficient than the nerds of the 50s. Or at the very least they will be more comfortable with technology. It is also clear that as the economy develops further in this direction there will be an even greater growth in service jobs, high quality service jobs. But my real point is that a free market is more likely to do a better job of getting people to adjust to the changing dynamic than some static government attempt to stem the inevitable tide. Where do you live now? Greenwich Connecticut. It is the first town across the border with New York when coming up the coast. Henry

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