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

To: Stitch who wrote (1237)	1/20/1998 8:13:00 AM
From: tom	Respond to of 9980

We already have a debt moratorium in most of Asia as no one is paying back their loans. In many cases they are not even paying interest let alone principal. This is effectively a debt moratorium - it just hasn't been made official. The central banks are deperately printing money to support their banks although the IMF is frantically trying to stop them doing so (that's one of the reasons that the currencies are so weak). Indonesia has lent billions of dollars worth of money to its banks in the last month. I think they could continue doing this in the case of a moratorium. I disagree that Asia needs much more investment. It already has enough housing, banks, cement plants, mobile phone networks and semiconductor plants to last it some time. Its problem is OVER not UNDER investment. Asia needed the cost of capital to rise in order to facilitate the efficient allocation of capital. Anecdote from 1996: Semen Cibinong's (Indonesian cement company) target for ROE was 15% even though that was below bank deposit rates of 20%. WHY????