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Strategies & Market Trends : Waiting for the big Kahuna -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (6942)	10/23/1997 1:38:00 PM
From: tekgk	Read Replies (3) \| Respond to of 94695

I agree with most of your main points. >> ability to service the debt - yep >> 10 billion $ loan but receipts in Yuan - yep >> crisis of confidence - yep >> Lower currencies may lead to importing price stabilty - partially this could actually become deflationary and put a severe squeeze on profits for US corporations >> slow the economic expansion - this is an understatement, Asia has been the worlds growth engine for the past decade - what is going to take it's place? I have some questions for you. So far we have accumulated 880 billion in foreign debts to finance the twin deficits (current account and trade) The trade deficit will only get worse with the strong dollar. So far the deficit has been mostly financed by Asian countries. Who is going to finance it going forward? Right now we are seeing a flight to safety from Asia for a few days or weeks - what happens when it is over? Where does the money come from month in month out? What happens if Asian countries have to sell US paper to combat a domestic crisis like bank failures? My main point in the previous note was that the politicians and press are not relating real debt numbers just budget mumbo jumbo and that they are cheating big time on the social security side. If the economy slows down will the congress have the courage to cut to control the deficit? I don't think so - they are already trying to spend the receipts from a very rosy scenario that they don't even have yet.