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Gold/Mining/Energy : Naxos Resources (NAXOF) -- Ignore unavailable to you. Want to Upgrade?

To: GOGI who wrote (8594)	1/27/1998 9:50:00 AM
From: mark silvers	Read Replies (1) \| Respond to of 20681

First trade of the day-- 5.625 market 5.25-6.0

To: GOGI who wrote (8594)	1/27/1998 11:30:00 AM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 20681

OFF TOPIC GOGI, I do not live in Japan but have been actively involved in doing business in Japan and analyzing economic events there. I would like to make a few comments about your post. I agree that the situation in Japan is bleak and much worse than people in the US realize. You say "The Japanese are business savvy but they have multiple problems". I agree with half that statement, they have many problems. But I question whether they are good businessmen. There is no question that they are very good at engineering and product design and creation. The quality of their products are excellent. But their skill at managing businesses is atrocious. Outside of export industries Japanese business is terribly inefficient. Their success has largely been the result of monopolistic practices to protect domestic businesses, large indirect government subsidies, restrictive trade practices and till extremely low interest rates for decades that gave them extremely low cost of capital. The last factor is extremely important because it is that low cost of capital that was a major factor in the incredible over leverageing that is at the heart of Japan's current problems. You point out connections between dishonest politicians and dishonest businessmen and organized crime. Clearly this is a major problem. But an even bigger problem is the dead hand of Japanese business and economic orthodoxy which to this day refuses to admit the full extent of the problem. The MOF is incredibly insular and is still living in the past. To many Japanese business and government people read their press clippings in the 70s and 80s and came to believe they could do no wrong. This led to an arrogance that led them on a global buying spree where they bought any asset at any price becuase they were convinced they had the golden touch. You are right to say they have continued to opt for band aid solutions. But the people I speak to are fairly well connected and they are detecting some, but only some, change in Japanese attitudes. As dangerous as the Japanese situation is it is my belief that they will be able to back away from the edge of the abyss and over the next 2 or 3 years the Japanese economic ship will be put back on course. Indonesia is another matter. The economic and political elite make the Japanese look like choirboys. I believe that there is a desire in the international community to allow Indonesia to collapse as an example to the region. The only reason this is not being done is threefold. First is the obvious risk that this would present to the economic health of the rest of the region. Second, given Indonesia's history the result could be incredible bloodshed and no one wants that on their hands. Third if there is internal problems it could cause security risks for the rest of the region. My own feeling is that the Asian crisis will be muddled through and in fact instead of having deflationary consequences will eventually have inflationary impacts (mild not 70's style inflation) We have already seen the printing presses in action in several Asian economies. Europe will be finished by May with the charade of financial austerity that they have used to engineer the EMU. Once that is decided on I believe the EMU has incentives for inflationary fiscal policy in Europe. I agree the US equity market is over valued but not egriously so. A year or two of a 20% decline and the market will be in much better shape. The current situation is very different from either '74 or '29 and I don't believe we will see a repeat of those scenarios.

To: GOGI who wrote (8594)	1/28/1998 12:21:00 AM
From: Kim W. Brasington	Read Replies (3) \| Respond to of 20681

GOGI: Thanks for your response and insights. It was of great interest to sit down and read what you and Henry had to say. I am interested in accelerating global trends, and this appears to be one. The magnitude of what may happen in Indonesia may be on the level of Cuba '59, The Congo in the 60's, or Iran after the Shah. Every one of those events had an impact on the world, and would today even without the polarization of Communist - FreeWorld blocs. I recognize that today's world operates at a much faster pace than the world of our parents and grandparents. Change and rapid at that seems to be a growing constant. It was only 6 months ago that this was touted as a "minor problem". Regards, Kim W.