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Non-Tech : Any info about Iomega (IOM)? -- Ignore unavailable to you. Want to Upgrade?

To: KM who wrote (33446)	10/26/1997 10:25:00 PM
From: Paul Angell	Respond to of 58324

Trufflette, If you like economics try this: ms.com Paul. PS. FWIW - Roach's Opinion on The Asian Crisis: <<US: All Bets are Off -- At Least for a While There's nothing like being caught in a fire storm. With the Asian financial markets sinking like a stone, I dutifully made the rounds in Tokyo, preaching the bearish gospel of the coming Fed tightening. I was even starting to feel good again about our long standing out-of consensus call on interest rates. Fed Chairman Greenspan had made it quite clear that he now sees the risks quite differently than he did last summer when he enjoyed a brief flirtation with the new paradigm. With a fully-employed US economy back on a solid growth path, his judgment that the outcome may be "unsustainable" is Fedspeak for full alert. And the growing sense of drama was heightened all the more with Greenspan asking to have his upcoming congressional testimony delayed by a day in order for him to examine the results of the upcoming Employment Cost Index (due for release on October 28). The gun seemed loaded and the trigger was cocked. But now all bets are off. The Asian crisis has clearly escalated into a global event that has the full attention of the world's major central banks. Up until October 23, it was largely a region-specific disturbance, with dislocations reverberating back and forth from Thailand to Indonesia and eventually to Taiwan and Hong Kong. But now the "butterfly effect" is spanning the globe, prompting a markdown of global equities, a flight into Treasuries, and jitters in Latin America. Under those circumstances, central banks appear to have no choice other than to abandon their traditional agendas and seek to provide stability and liquidity to beleaguered financial markets. Only when the dust settles and the markets find a new equilibrium, would monetary authorities be able to return to business as usual. In the meantime, it's important not to lose sight of the fundamentals that will still shape the outcome once the financial markets re-stabilize. In that vein, I can't help but think back to the events of some ten years ago. In the summer of 1987 the Fed had embarked on the early stages of a counter-cyclical monetary tightening. But then came the stock market crash, and the central bank cut the federal funds rate by nearly one percentage point in order to shore up liquidity and avoid the wrath of a potentially powerful wealth effect that was widely feared to be capable of tipping the economy into recession. It took several months before the Fed realized that the real economy was a good deal sounder than the financial markets. But by then it was too late and the central bank fell behind the curve of an inherently strong and increasingly inflationary US economy. In response, the Fed had to scramble -- raising short-term interest rates by 300 basis points in the eleven months beginning in March 1988. The lesson: While central banks can and should alter their tactics at moments of crisis, the longer and further they stray from their domestic agendas, the greater the risk of destabilizing policy responses down the road. As I come to the end of a tumultuous two weeks in Asia, I can't help but be struck by another lesson -- the raw fear of a region in crisis. The once fabled Asian growth model seems to be teetering on the brink of collapse. Asset values once priced for the golden era of Asian prosperity are now subject to wholesale markdowns. Yet behind the chaos, the fundamentals of the region's real economies don't seem to have changed one bit. The Asian crisis is more about unsound policy practices than it is about the inherent vitality of the region's dynamic industries and relatively low-cost labor. Interestingly enough, with currency values now some 40% to 50% lower (and falling), those very industries should have even greater opportunity to expand their market share in the rapidly growing global economy of the late 1990s. It's always a stretch to grope for silver linings in moments of chaos and crisis, but that may well turn out to be the biggest story of all. For the moment, however, you can forget about the immediacy of any Fed tightening, in my view. The same can be said for our bear case for bonds. Treasuries are still the world's safe haven, and as long as the markets are in shambles, the immediate risks to long-term US interest rates are more on the downside than on the upside. But as this crisis passes -- and I believe that will be the case sooner rather than later -- it should quickly be back to basics. I stand by my view that any Asian growth shortfall is not enough to have a major deflationary impact on the US, Japan, or the world economy. When the dust settles, I also think the Fed will find a still solid US economy drawing even more support from lower levels of real interest rates. In that context, the case for a monetary tightening would be even more compelling -- as would the bear case for bonds. The Asian crisis buys time but does not change the endgame. Stephen Roach (from Tokyo) >>