Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: MikeM54321 who wrote (3953)	5/28/1998 12:26:00 PM
From: Michael Sphar	Read Replies (1) \| Respond to of 9980

I was thinking in terms of Japanese exports to the rest of the world. I know they have been strong exporters to other Asian countries. They should be seeing a decline in that sector. Do they expect non-Asian exports to pick up this slack ? But a lot of Japanese companies do their manufacturing in these same foreign countries, so their cost of manufacturing ought to decline for what they can export. The remark about China was intriguing. On the manufacturing side I would suspect Japanese companies have a lot of factories in China. But there is also a strong antagonism between these two cultures so perhaps that was being expressed too.

To: MikeM54321 who wrote (3953)	5/28/1998 6:38:00 PM
From: Lee	Read Replies (1) \| Respond to of 9980

MikeM, I have been wondering about the whole prescription fitting the disease. As has been documented quite well on this thread, the global problem is a supply demand imbalance. Now the US says, "let our currency strengthen and yours decline." True, it does boost demand, and we are a throwaway society, but think back to 1998. Japan had a big market share in many industries and our supply declined. Our prescription to the problem is to lower OUR supply when Asia overbuilt. To put it another way, take some of the most productive capacity off the market. I suppose from a humanitarian point this may be good. But it also allows some of the current policies to continue. It promotes Japan's carnivorous model, which at times appears as economic war. Take this prescription too far and demand too will fall here in the US. Not too long ago the concern was the US would be hurt by lack of consumption in Asia. Now our solution is to reduce US consumption of US built goods here in the US. I have a problem following this logic. How does this help US industry? We have followed a supply model to reach this phase it will be a supply adjustment that gets us out. Some banks and companies will have to fail. To think we can solve the global economic crisis through consumption causes Japan Inc execs glee. A solution? Perhaps Japan Inc planned this long ago, keep building and building, don't worry about profits. The US will bail us out and soon we will topple the evil capitalist US (who wish to displace our culture with her own.) I suppose the currency movements are in the end a matter of the market. To meet this challenge US execs must find more productive cost-effective capacity to survive. Perhaps we build more in Asia and that breeds an Asian recovery. But the push will be to increase world supply (even if at first we must lay-off employees in the US.) Unfortunately the market makes pay those who build economies on ponzi logic. The Asian middle class will have to learn that economic miracles are built on sound systems and must demand such systems from their leaders. Market adjustments are painful. Factories, banks, countries may fail. How much of this pain should the US import. We will get our fair share, will we get more? Id prefer the market decide, not the IMF, not Clinton, not Rubin, and not Japan Inc. Cheers, Lee