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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: FR1 who wrote (171)	10/6/2000 7:43:56 PM
From: Ahda	Respond to of 24758

Franz i don't like interest rates you use high because of risk and you use high to deter growth. They are difficult to adjust in my mind. It appears both US and Europe have higher wage costs and parking right now beyond three months might not be a good idea in either direction in my opinion as i for see higher rates. The euro is an attempt to unify that which is not unified and I feel that is one of the major problems with it. My parking preference at this point is turning towards India long term. Their growth potential is huge though the social climate is yet immature. Im lost on a decision re Euro due to nations as individuals and their accounting procedures that apparently differ substantially from ours. You could end up with a reverse transparency factor here. Friends just returned from Germany and did not see a declining economy. The mark was a respected currency for numerous years and the euro, I feel, does not convey the same strength to the world. Sorry Franz if i got so wordy but in Asia there are many wonderful tech products happening. PC's much less costly than ours innovations for the people who live there, not visit. Lower wages lower costs and products that are going to cater to their national needs. I just gave my self a headache as to the direction of the us dollar. Instead of reacting to the conditions of the US dollar and our market many of these Asian nations might just start acting on their own.

To: FR1 who wrote (171)	10/6/2000 9:31:40 PM
From: ahhaha	Read Replies (2) \| Respond to of 24758

Bond return has not been as important as risk capital return since risk has been low and returns have been high. Far more important has been the secure high investment returns available in the US. Teitmeyer, the Bundesbanc's ex-chairman, made a very important statement in '98 concerning how countries should conduct monetary policy. He said they should formulate that policy exclusively on the internal state of affairs unique to a country and not be influenced by what a similar, perhaps neighboring, country may be doing. The advent of the ECB has made that somewhat problematical, but it still holds and it is wise advice. The ECB raised rates to slow the propensity to inflate due to oil import cost factor. They aren't so concerned about slowing final demand to cool off demand for oil as they are concerned about creating an environment that discourages labor monopoly from suing for higher wages. They can't let the wage price spiral start developing and so they have to start early and persist. This is independent of what the FED may be doing or what the Euro may be doing, although the Euro will reflect such actions eventually. Without overt wage cost inflation in place the ECB is engaging in demand management and it is a mistaken policy. Right action is to increase efficiency by lowering taxes across the board, a supply side management, but this would be a delicate engineered attempt to provide incentives to produce and it seems impossible given the ECB nation's preference for the high tax supported social state. The ECB can't wait for the people to implement what must be done. Since the people won't elect to implement the same policy that saved this country, the ECB has the responsibility to protect the integrity of money. The outcome of this loggerhead position will be recession in Europe. In order for rate differentials to become meaningful to currency trends, a 400 basis point difference is necessary. 400 is a function of the absolute level of rates and of the difference in the efficiency of capital between two nations. That difference doesn't exist among the G7 nations.