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

To: Rational who wrote (691)	1/11/1998 5:27:00 PM
From: Jack Clarke	Read Replies (2) \| Respond to of 9980

Sankar, As we have come to expect, you have posted a cogent analysis of the current debt, credit and currency crisis. I would like to comment on one of your statements. Permit me to ramble a bit about it. >>Well, this is a form of subtle corruption that is being fostered in the name of help and to achieve the ulterior goals (IMO). How true, how sadly true. I am chagrined that I have become a cynic in my maturity. Now we must all regretfully accept that governments, yes even ours, are corrupt, and that they represent their major corporate and other benefactors rather than the "people". Any benefit to the people by trickle down effects is secondary. What I am getting at is that I think we need a third political party in this country. Who knows, if we do happen to fall into some sort of recession, or if the boomers' pension mutual funds do not appreciate by 20% per year, the population may be angry enough to "throw them all out". Perhaps I should start a "third party thread". Thanks again for your analysis, Sankar. Jack

To: Rational who wrote (691)	1/11/1998 5:50:00 PM
From: Esvida	Read Replies (1) \| Respond to of 9980

''Whenever your economy is in a crisis, the first thing to remember is not to call the IMF.'' This is a very wise counsel, consistent with my posts many days ago here. Sankar, who forced Indonesia, Thailand and Korea to call IMF? The biggest champions of the so-called free-market economy do not understand the meaning of free-markets. I recall once Fischer Black (the author of Black-Scholes formula) was invited by the Fed. At the BOG meeting, Fischer said to Alan Greenspan and the Board to close the Federal Reserve Board and abolish the organization since that would be optimal for tax-payers. You're lucky to be privy to this kind of meeting/conference, but I suspect that you're not giving us the whole picture here. In a free-market, a Central Bank has no role Is this your view? Again, I suspect you're not sharing your whole view. As long as we rely on fiat money, how can we operate w/o a central bank? Who is missing something here? and an IMF is distortionary; these institutions try to achieve their own agenda when they get an opportunity, like squeezing every drop of blood from SE Asia to the advantage of the creditors who are at fault in lending excessively to companies without adequate monitoring. I don't think any creditor nation will send armed forces to impose IMF on the debtors. I can easily sense that removing corruption is not an important goal of the IMF and that the IMF would rather entice the corrupt officials to toe their line on other matters -- repay loans at any cost and reduce the asset values so that the same capital can get in to acquisition of the assets at low prices. The main IMF goal (IMO) appears to economically recolonialize the SE Asian nations by taking over their economies. Kissinger has issued a warning in this regard because of the anti-Americation sentiment that is likely to ensue in Asia. I don't understand you logic here. One the one hand you think IMF is invading these countries, but one the other hand you want it to add the goal to fight local corruption to its agenda? This paragraph seems to be a politician's statement than an economist's opinion. When Japanese went about buying companies, trophy properties in the US a few years back, a lot of people were also raising emotional statements similar to yours here. You know how right those people turned out. I'm not saying that there won't be resentment against the US there, but I'd characterize it as a normal consequence of the US's current success. In a free market, these countries would simply not pay their debt when they could not. This is the standard tenet of borrowing and lending in a free market. This is why a creditor spends a considerable time and energy to asses the borrowers' creditworthiness and accounts for the possibility of defaults. I wonder too why they're not doing exactly this, but chose to deal with the "evil" IMF. When a company in the US does not pay its creditors; the company simply walks out -- US regulators do not force the shareholders to come up with money from their parents or from their other endowments. This statement is true for incorporated entities, but it is not true for other form of organizations. Depending on the legal form of organization, some owners are responsible for a company's liabilities. I'm not aware in any situation that in the US anyone is obligated to take over others' liabilities because of any relationships except when cosigning is involved. Why should Koreans or Indonesians pay for the banks and companies that did the wrong or for the misdeed of creditors like Citibank? I do not understand why these countries should have to listen to the dictates of the IMF that is forcing massive unemployment, poverty and social unrest? I agree here, but I think it's entirely up to a country to weigh the pros and cons in taking over the liabilities. Well, this is a form of subtle corruption that is being fostered in the name of help and to achieve the ulterior goals (IMO). I understand that you are a busy man who has very little need to justify his own views on this forum, but anything here to elaborate on this accusation will be greatly appreciated. I am afraid that many of Suharto's pet projects, proposed by his cronies, will be allowed to continue and that he will stay in power despite massive corruption to get his consent to the IMF policies. My belief is that Indonesian policy makers have been doing their best under the restrictions of their president and that they may have advised him for seeking a moratorium. The government did not borrow much. IMO, the Citibank, Chase Mahattan, Morgan Stanley, etc. are at fault by extending excessive credit to companies without monitoring the abilities of those companies, under the presumption that the Korean govt or the Indonesian govt would rescue. IMO, these countries should not have gone to IMF, consistent with Sachs' views, and should not have declared their support for the irrational policy prescriptions. I also repeat my wondering here. Why did they choose to deal with IMF? I think Malaysia chose not to ask for IMF help. -Al

To: Rational who wrote (691)	1/11/1998 5:50:00 PM
From: Stitch	Read Replies (2) \| Respond to of 9980

Sankar, I tend to agree with Sachs. But I wonder what alternatives Thailand and Indonesia would have had? Of course, in the future systemic reforms will be required, but given the situation, where else but the IMF? Best, Stitch

To: Rational who wrote (691)	1/11/1998 7:32:00 PM
From: Rob S.	Read Replies (1) \| Respond to of 9980

The basic fact is that the Asian problem stems from foolish national and corporate strategies to use huge debt to build massive plants and infrastructure on the assumption that the debts would eventually be paid off from profits on an equaly massive scale. This jump-start of third-world enconomies into 21st century economies has proven to be overly grandiose and simplistic thinking - just the kind of thinking you get from top-down, beureaucratic governments and corrupt quasi-governmental/corporate structures. The basic fact is that the majority of S. Korean, Malaysian, etc. companies have massive debt; Smasung for instance has 8X debt to equity ratio and it is thought to be more solid than many others. I agree that the IMF is run by international banking interests and that their goal is to gain control over the banking institutions and corporate assets they will help to insure. However, the problem didn't start with the IMF. I think the IMF and Japan, German & USA private banks should pull out of subsidising Asian debt altogther and let Malaysia and S. Korean companies collapse! Then you will see how worthless all those assets realy are without the support of sound policies of some sort - sound policies certainly haven't developed on their own up to this point.

To: Rational who wrote (691)	1/12/1998 12:14:00 PM
From: Worswick	Read Replies (2) \| Respond to of 9980

Sankar it was my promise that I would take you up on a few things in your past posts. I think what I have say deals the realm of Asian verities, a feeling perhaps that Asians are somehow morally superior to mere money grubbing other mortals. I see this tone in your posts. That Asians are morally superior because the come from cultures which are more atune, somehow, to the inner being. Do you really have this constant anxiety that somehow the IMF and it's running dogs CitiBank and the Harris Trust Company are going to re-colonize Asia? I must say Sankar I don't know how to take your fears of the re-colonization of Asia. It seems to me that the Indians I know have done a good job of "colonizing" both the financial sector and the medical sector in this country. We are not living in the colonial period anymore. After all the Indian-landed immigrants in the US are something over a million souls. I know of only one person who immgirated from the West to India. Perhaps that says something about the moral verities of Asia. Did all these people came to the west to be corrupted? As far as the fears of re-colonization of Asia by the west goes....remember when you were growing up that the US had "notes" for food-aid received by India.... to the tune of (eventually) five times all the rupees in circulation in India? Where did all that lead? A great so what. We are not living in times that anyone can colonize anybody. We now have the world-wide democracy of the Ak-47 and the Stinger. In the 19th century it was possible to colonize places when you had Martini Henri's and the "natives" had matchlocks. Things change. The UN learnt in Somailand you can't even get the "natives" to be reasonable anymore. Perhaps, however, moving beyond the realms of the right's and wrong's of the IMF bailout.... and it's possibly very short term consequences... it seems to me that we are moving beyond the possibility of IMF "bailout"? Literally. Looking at the collapse of Peregrine Securities (the premier Asian owned/Asian operated investment in Hong Kong) what one has now is a situation where the woof and warp....the actual fabric of Asia is beginning to unravel. Think about this. If short term liquidity is withdrawn from the market by Japanese and western banks what happens to business in Asia? You have collapsing asset prices in share markets, collapsing reserve ratios in banks, currencies going down like they have been taken out and shot. We are looking at massive bond defaults ahead by both Asian banks, and businesses. I think we are really counting down here. I give this about one more week before we in the west are in boiling oil not just the foolish Western neo-colonialist investors, banks and insurance companies who looked to S&P and Moodys for some knowledge of markets they covered.