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

To: tom who wrote (2206)	2/16/1998 2:48:00 PM
From: Mohan Marette	Read Replies (1) \| Respond to of 9980

Tom: I know you didn't ask me but your assessment seems like it couldn't be very far from the reality and a grim reality it is.Like you said even Mother Nature (aka El Nino) seems to be against Suharto ! No, I don't want to add any more to your list as I think the reasons you gave here are are noteworthy enough any addition would seem irrelevant and insignificant.

To: tom who wrote (2206)	2/17/1998 9:20:00 AM
From: Worswick	Read Replies (1) \| Respond to of 9980

+Tom thanks so much for your thoughtful post "on the ground". Nothing like reality to wake you up vs. the TV steady-cam view that we get on TV here and in the presss. So, again, thanks for your view from the trenches. Please don't think me peckish but I do think the scenario in Asia is deflationary not inflationary. If you reference in your mind our "Great Depresion" what happened was that basically no one wanted to spend money. The banks weren't lending it: people hoarded money so they wouldn't be destitute. At that point the whole economic system froze up. If I may quote you: "(in Indonesia there is)....huge foreign debt which the country cannot possibly service let alone repay (hence the debt moratorium) ie. the country is bankrupt - Banks are not lending domestically so the economy has essentially stopped for the last 6 months. Even exporters cannot get credit for working capital ie there is no liquidity to keep the bankrupt companies afloat" My point is that governments create hyper-inflation by turning on the printing presses. However, how do people get this money? I would think that people had to have work to get money... unless the government simply were to hand out money on the street corner. In a deflation there is no work because no one is buying anything: the economy has imploded (note yor post):and, banks aren't lending businesses any money to create work for workers. Money, the glue that creates commerce, has ceased to circulate. Game over. Not too many people understand deflation. There are very few books on it. Your insights on the disentegration of the social fabric of Indonesia suggest something that I suspected but had not heard. Again, thanks. IMHO once the enormity of this problem begins to be understood there will be something like the Marshall Plan undertaken in Asia that is a supra reliquification of the banking sector; it will be multi-national effort. It (the Asian crisis) will force the world into a new paradigm of "cooperation" and transparency because "investors" will baulk at anything less. This is the rosy view. I'll leave the gloomy view unsaid. Stitch your post was great.

To: tom who wrote (2206)	2/17/1998 9:34:00 AM
From: Worswick	Read Replies (1) \| Respond to of 9980

+Tom further to yours. Good professor Beltz in Hong Kong: For Private use only. To: +Robert Grutza (4847 ) From: +Jess Beltz Saturday, Feb 14 1998 9:01PM EST Reply # of 4874 Robert, I have been pounding the table on this one without ceasing. Indonesia is going down in flames as we speak. Suarto, in addition to being completely corrupt, is adept at saying exactly what the IMF and outside investment world wants to hear, without any intention of implementing any of the things he says (the universally recognized needed reforms.) Furthermore, there's really no one to take his place in the upcoming elections. Unfortunately, I think he's played his last card (the monetary board-currency peg hoax) and the situation will deteriorate rapidly from here on. I don't think the country is going to make it to the elections, it will disintegrate before then. As I've said in the past, as far as US markets are concerned, what happens in Indonesia is incidental. The problem is that as far as SE Asia, particularly with respect to the precarious situation of the region's banks, most particularly with respect to Japan, the situation is not incidental. As mentioned, 90 % on Indonesia's top 200 firms will be forced to renegotiate their debt (all of it bank debt) and that represents a new load of bad loans which may not be recognized on the books of Asian banks already in trouble. I do not know how much of that debt belongs to banks in Japan and Hong Kong, but if its extensive, the domino problem is what will shake the markets here and in the West. That is, the economic problems (exacerbated by political troubles) could pull down some major banks in both places. What you have to remember (and this is the huge problem here) is that there are no efficient, smooth functioning bond markets here. Banks are the only source of debt capital. That means that systemic banking crises like re unfolding carry with them the threat of an ultimate credit crunch which simply will stop all economic expansion. That is what makes the IMF bailout packages so critical. I realize that a lot of money has been flowing into semis and semi equipment stocks, but after selling my Cymer at 20 a week ago, I've resisted the temptation to jump back in to the sector, in spite of the rally going on right now, because the situation that has been unfolding here is, in a word, explosive. I think the big impact will be in Japan, the regions lender. I am searching for any data on how much of the bad debt in Indonesia is associated with Japanese banks. I would say that at this point, investment in the equity of ANY firm (not just semis)with exposure to Asia is extremely risky, and doesn't carry at the moment enough reward to induce me to invest. Indonesia is not going to explode, it is exploding, right now. Riots, killings, inflation above 30%, massive layoffs, bankruptcies, a corrupt strongman, you name it. The ONLY question is, who in the region will go down with it. Sorry if I sugar coated it.