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

To: Jack Clarke who wrote (2157)	2/14/1998 6:35:00 PM
From: Stitch	Read Replies (2) \| Respond to of 9980

Mohan, Jack, all; It may be oversimplification but what Jack says has a certain ring of truth about it. <<Yes, if the IMF doesn't come to the aid of the big lenders and foreign stock mutual fund sellers, some little guys will get hurt, but they will learn whom not to place their investments with in the future. More importantly, the planet will learn that sanity has been restored, and that you don't get that high premium for high risk loans and investments for free.>> We all know the axiom about "paying the piper" eventually. Or perhaps another metaphor is better. That one likening the "fixes" that IMF represent to giving methadone to a heroin addict. Never did and never will cure the disease. The real question is whether we continue to mortgage the future with these bail outs making the inevitable all that more painful. To liken Asia to Mexico is sheer folly IMHO. First of all the amounts involved bear no resemblance to each other, nor do the cultures, (in this case many and diverse). Secondly the Mexico crisis involved government debt, not private debt. However, in reviewing this issue we must not forget the role an IMF bailout plays in rehabilitation of political and business practices that clearly were all wrong. To simply let the region, (and probably thus the world) sink into a prolonged recession may not allow any remediation at all to emerge. What would emerge from those ashes could be a sort of commercial feudalism, with warlords that managed to win the most gold, and natural resources from the resulting fray (and I mean warlords from all over the world)calling the shots. Try to imagine DeBeers negotiating with the heads of the Russian mafia for example. I realize how far fetched all this sounds but its useful to do some free wheeling "what if" scenarios in considering very large issues like this. In my opinion the article linked below in another post that argues for a dissolution of the IMF is a bit anachronistic. It harkens back to a time when markets could function partially because of their insulation from other, culturally autonomous, markets, allowing positions to be strategized relative to those respective markets. Surely that is where we are today in the main. But if we believe in emergence of a borderless world market, then surely the sense of a world regulatory function makes some sense. The World Bank, the EMU, the IMF, ASEAN, G-7, all are attempts to move in that direction IMO. I do believe in the eventuality of a true world market. The inexorable progress of technology is one reason and its effect on communication. I am looking way beyond my lifetime with these comments, by the way. I agree with Soros' comment to the effect that trade outpaced the infrastructure of laws and rules to govern it. Thus, just one of the many reasons we are where we are. So, IMO, we either slow down, or regulate further. Any thoughts? Warning" I have sort of let my thinking go on overdrive here and any rebuttal not only will not be resented but will be most welcome indeed. Best, Stitch