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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Rational who wrote (353)	1/2/1998 11:18:00 PM
From: Tom Markowski	Read Replies (1) \| Respond to of 9980

If YEN continues to sink (and I think it will).... we should start to see a Trade War erupt with US and Japan. Japan is an export machine...and will not increase their own consumption of US goods. All of Asia will look to the American consumer to bail them out.

To: Rational who wrote (353)	1/3/1998 10:41:00 AM
From: Zeev Hed	Read Replies (2) \| Respond to of 9980

Sankar, I think that what we will have is something similar to the Marshall Plan after war war II. Many in congress were against it, but I view this as the most important policy decision by Truman, and this plan led to a period of very strong economic growth in the US. Yet European currencies did not start to gain against the US dollar for years after the completion of the Marshall plan. I still think that over the next six months the yen will weaken further. Zeev

To: Rational who wrote (353)	1/3/1998 3:25:00 PM
From: RagTimeBand	Read Replies (2) \| Respond to of 9980

Sankar >>I had made a post here stating that eventually the Asian currencies (including yen) will have to appreciate to cut the huge and ever increasing US trade deficit. My reasonings are as follows:<< Thanks for the very interesting post. I'm wondering if you would discuss the possibility of a devaluation of the US currency as another alternative. We've done it in the past. Regards - Emory

To: Rational who wrote (353)	1/4/1998 11:58:00 PM
From: RagTimeBand	Read Replies (2) \| Respond to of 9980

Sankar I attempted to ask you a question about this before but I don't think I worded it very well. In you post you listed reasons (which I've copied and pasted below) why the Asian currencies have to appreciate. My question is: wouldn't it be quicker and accomplish the same thing if the dollar were devalued? A follow-on question would be this: If the U.S. were to sell a percentage (10, 25, ??) of its gold reserves would this sufficiently devalue the dollar? I hope my question(s) aren't so ridiculous that I'm wasting your time. Regards - Emory >>I had made a post here stating that eventually the Asian currencies (including yen) will have to appreciate to cut the huge and ever increasing US trade deficit. My reasonings are as follows: * The dramatic decrease in the US budget deficit was possible due to large corporate profits and individual stock trading gains, dividends, etc. -- leading to greater IRS revenues. * US personal income has not risen in real terms; actually the recent income gain must be related to trading gains. I do not have facts, but am saying this because the corporate wage is not rising. * When corporate profits decline, stock prices, and dividends fall, the IRS will collect less taxes. This will raise the deficit to where it was, putting enormous pressure on politicians as the apparent American wealth and income fall. * In fact, after making that post, I heard the IMF Chief Economist (or MD) Mussa (whose work I know of) say that the IMF is working on improving the Asian currencies. * The US policy makers know very well that unless the Asian currencies (especially yen) rise, it would be nasty for the US. That is why they are working very hard to prevent a disaster in the US. Now, yen can rise if Japan wants so. Japanese will want this only if other Asian currencies appreciate. These currencies will have to be made to appreciate since smart US policy makers already know the seriousness of the problem on the US budget deficit, trade deficit, falling real wage, and wealth. How will the US policy makers help? The only way (beyond the IMF loans that are not helping much in improving the Asian currencies) is federal funding of Asian purchases of American goods, e.g., Boeing jets to Thailand. In other worlds, a part of the American wealth will have to be plowed back (not freely!) to Asia to raise their currency values and make them pay the loans more easily.<<