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Technology Stocks : Semi-Equips - Buy when BLOOD is running in the streets! -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (5999)	6/24/1998 4:11:00 AM
From: Jess Beltz	Read Replies (2) \| Respond to of 10921

Justa, no real sabre rattling, just the stuff with the Yuan. Let me address your points in order: (1)"The Chinese leadership likes that law and order deal to the max." That may be the real reason why they have to devalue. They are already facing looming massive unemployment as a result of the scheduled reforms involving dismantling the inefficient, money losing and poorly run state owned enterprises. That is their number one policy objective. The longer they avoid devaluing, the less competitive all of their industries related to export trade become with respect to their neighbors whose currencies are being hammered daily. That will ultimately translate into loss of export trade and even more unemployment in that sector. There is undoubtedly a limit to how much unemployment (and the resultant social unrest) they can stand. (2) "They would be viewed as outcasts by the US policymakers if they had Clinton over to show him a good time and have their dog and pony show only to stiff him after he leaves." We're talking economic survival. Things are getting pretty dog-eat-dog now, and while the PRC shows more sensitivity to world opinion than, say, the former Soviet Union, still, being a totalitarian state, when push comes to shove, they'll do what they feel they must to survive, regardless of what they've said, to Bill or anyone else. (3)"Besides, I would think that other Asian currencies would depreciate as a result of Chinese devaluation anyway which would negate any competitive advantage the Chinese could have hoped to attain." You're right, they will, and big time, but what does China really have to lose, IF they remain competitive in the export-trade market. Besides, as the yen continues to fall, the regional currencies are getting killed anyway, and the burden on the Chinese looms ever larger. Why should they be a martyr for the rest of Asia, particularly Japan. In some ways, the current situation IS Japan's fault, and the Japanese are doing everything they can to avoid fixing the problem. While I in no way love the PRC, if I were China, I'd truly be mad as hell about this. They have every right to be. By the way, your point is well taken that the Chinese Leadership will give Clinton an earful about all of this. I expect full well that that earful will be passed on to Rubin. It will be extremely interesting to see what happens on-and-after the 12th of July. If the Japanese people return a mandate for reform, and the leadership turns a blind eye to it, AND the Japanese need an American bailout, I think the shit will hit the fan. How it will translate into semi stock prices can probably be summed up with one word - VOLATILITY!!!!! jess.