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To: Kathleen capps who wrote (26070)	12/24/1997 9:16:00 PM
From: Earlie	Respond to of 53903

Kathleen: Korea is, as others have noted, a "solvency" situation, not a "liquidity " situation. Many of the organizations that are in trouble are outright bankrupt as a result of massive leverage. If they do the right thing, (as opposed to the easy thing), they'll let bankruptcies clean out the mess. Japan is paying a terrible price for not so doing years ago, with respect to the collapse of their real estate bubble, and provides a painful example of how not to handle a debt collapse. I'll bet that there will be no choice in the matter in any event, as the IMF simply hasn't got, nor can it obtain, sufficient dough to do the job. (notice that it wasn't the IMF that provided the piddling $3.0 billion today...it was the world bank).We've already alerted our clients to expect "sovereign" defaults in January and February, commencing in Asia, and probably first emanating from S.Korea. Unemployment is almost unheard of in S.K. (2%), but this will rise quickly to 4 times this level in the months ahead. This is deflation in action. As noted earlier, the Tsunami approaches our shores, and I'm glad all my people have vacated the lowlands. The lambs graze peacefully in the valleys. I hope the new pres in S.K. has the strength of will to press ahead with a house cleaning. It will be ugly, but the Koreans are hard working, well organized people and they'll persevere. Don't worry, our turn is also coming (no g). Best, Earlie