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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: yard_man who wrote (11474)	12/14/1997 7:17:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 18056

Barry by dislocations I mean sharp economical upheavals resulting from sudden shift in policies and resulting redeployment of assets to optimize their utilization. If after WWII the leading Governments of the world would have announced their long term plans to debase their currencies (disconnect them from gold completely), that would create a sudden shift (up down I do not know). The problems Korea is facing right now, is not completely unrelated to the fact that close the $70 Billions in hard currency has gone underground, since they suddenly and quite abruptly addopted the "real name" policy in their banking. These funds, if they were in the system instead of matresses could have alleviated much of the current debacle and get through the overcapacity readjustment without suffering a 50% devaluation of their currency and a market decimated to about 40% of its high. We did the same stupid thing of suddenly changing policy in this country and paid with the massive write down in S&L and banks. The misstep was the sudden (without grandfathering) elimination of the unique tax treatment for a variety of investments (particulalrly real eastate), that turned many investments that made sense under one set of tax arrangements worthless under new ones, and thus a major dislocation. These states and economies are too large to turn on a dime and sudden change in any of the rules of the game are bound to cause fast dislocations until the assets are redeployed to once again optimize their utilization in a free market. That is what I meant by they did not let us know, since if the world recognized the debasement from gold at once, massive shifts of assets between different categotries of assets would have caused major economical dislocations. Zeev