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.

Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Ramsey Su who wrote (20405)	6/15/1998 1:38:00 PM
From: Teri Skogerboe	Respond to of 70976

OT OT, Ramsey, Re: "Rubin and G7 lay off the yen and allow it to free fall. To the US, this almost have the same effect of slowing down the economy without raising interest rates." I think you've got it. The other thing Rubin (and the rest) must be thinking is that for Japan to act, they are going to have to feel major pain, i.e. they will only make the changes that are inevitable at some point when they are forced to do so. So, let the markets whip them to the point that they begin reform. This is very similar to what Barton Biggs suggested would happen in Japan. I think he nailed it. He said the currency and stock markets would have to beat them into realizing there's a problem, and one they can't continue to ignore. I don't think we can help them (much)... they have to decide to help themselves. My 2 cents, Teri

To: Ramsey Su who wrote (20405)	6/15/1998 3:49:00 PM
From: Teri Skogerboe	Read Replies (1) \| Respond to of 70976

OT OT, Ramsey, More food for thought on the yen situation. ked.co.kr

To: Ramsey Su who wrote (20405)	6/15/1998 4:03:00 PM
From: dougjn	Read Replies (1) \| Respond to of 70976

Yes Ramsey, I think that is what will happen. Clearly the Korean, Indonesian, Malaysian and Thai currencies are all headed lower partly as a result. The open question is whether or not China devalues the Remimbi. Given the size of China's foreign reserves, and even more importantly, the lack of free trading of the currency (which I read all the time but don't fully understand), its gonna be pretty much up to China. I'm not at all sure which way they'll go. I suspect they won't devalue this year at any rate, but am not sure. Anyway, the most interesting thing is what's next for the U.S. The trade deficit will hit by far all time highs on an absolute basis, and begin to approach previous highs on a relative to GDP basis. That will tend to cause the currency rise against Asian currencies to slow and then reverse. Meanwhile, reported profits of U.S. multinationals, will show even greater hits than expected, due to both the slow down in exports in unit terms, and also due to currency translations. This effect will be most surprising in the large medium tech multinationals such as 3M. This alone will not cause more than the sort of correction we're in now to worsen a bit. In the past a declining dollar has tended to cause an uptick in inflation. Perhaps that will happen here, if the economy is not sufficiently slowed by the profits slow down. Not really sure what happens subsequently if I'm right to here. Need to read some more. Any thoughts? Doug