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

To: Jyoti sharma who wrote (595)	1/8/1998 5:37:00 PM
From: Stitch	Read Replies (1) \| Respond to of 9980

Jyoti; <<Good luck with your shorts.>> I suppose one must consider it good luck in this market if you can manage to simply keep your "shorts". Best, Stitch

To: Jyoti sharma who wrote (595)	1/8/1998 6:08:00 PM
From: Rational	Read Replies (5) \| Respond to of 9980

Hi Jyoti: Nice to see your post here. Looking at the mess IMF has created in SE Asia, I can now fully appreciate how astute and smart A.B. Bajpayee (then External Affairs Minister) was in keeping the IMF at harms length. [There is a Sanskrit adage that says the happiest person is he who stays within his own means.] I do not belong to the BJP or any party in India and have no political preference here or in India. However, I am now more than ever convinced why Indira Gandhi used to stress self-sufficiency and why all Indian political leaders (irrespective of party affiliation) are not open to external investment without restrictions. In fact, the standard Indian motto is not to beg even when one is about to die. It is better to die than pass the indebtedness to children. India has had her share of problems and the policy makers have learned from those mistakes. I know the other Asian countries have similar attitude; but the SE Asians got sucked into the process in the name of free market and by the lure of prosperity. Today, Indonesian political leaders are telling (exactly what Indian leaders have been saying); they would have been better off staying away from western capital which basically flows whereever returns can be squeezed; without any concern about the mess it leaves behind when it exits. I really admire the Chinese leaders, although I am not a communist, to keep themselves insulated like India from the telling saga of SE Asia. In my opinion China and India will emerge more powerful than ever as the dust settles. I feel the IMF will be forced to reverse its policy for the SE Asian countries. I know Joe Stiglitz and had listened to him deliver a paper at Northwestern; he was at Stanford; then was Clinton's Chief Economist and now the Chief Economist at the WB; and of course a Nobel prize winner. I know his interference to change the IMF policy for SE Asia will have a profound effect because WB is a co-sponsor of this effort. I had made a several posts on SI a long ago criticising the IMF policy of high interest rate and budget surplus. Today, I am heartened to hear Stiglitz say: "Virtually every American economist rejects the balanced-budget principle during a recession," argues Mr. Stiglitz. "Why should we ignore this when giving advice to other countries?" "These are crises in confidence," said Joseph Stiglitz, chief economist at the World Bank and formerly President Clinton's top economist. "You don't want to push these countries into severe recession. One ought to focus ... on things that caused the crisis, not on things that make it more difficult to deal with." WSJ (1/8/98) Unfortunately, the IMF policy appears aimed at getting back the western loans to SE Asia while squeezing the asset values in these countries so hard that the same capital can get back to own those assets at bargain prices. India and China have managed very well in keeping under control such destructive forces of capital flow in the name of "free market." Incidentally, I admire Kim DJ because he was right in seeking a renegotiation of IMF terms. He should have remained firm. Suharto and his policy makers are (IMO) very smart to increase spending in their new budget; very consistent with what the US did and what Japan is going to do to avert recession. The markets reacted negatively because of fears of IMF backing down, Indonesia declaring a debt moratorium (which I think is a better alternative to IMF), and, of course, a coup. I think, though, that the IMF will change its policy (assuming that Stigliz can bring them back to sense) and that Indonesian private debt will be rolled over (govt debt is not a problem). I am just hoping that there will be no coup before these steps are implemented. Sankar