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To: Ramsey Su who wrote (6194)	7/5/1998 2:22:00 PM
From: Teri Skogerboe	Respond to of 10921

I agree that Asia and particularly Japan are in a mess, that won't soon go away. Korea may be the first (and only?) country to recover but is too small by itself to make a huge difference. I'm not sure that Japan does fully understand the depth of their problems, or they may not care. They may just want to tough it out and continue on as they always have. In the meantime, somebody will replace them. China. Three of the so called Asian Tigers are Chinese: Singapore, Taiwan, and Hong Kong. Singapore is deeply involved in China setting up economic zones similar to Singapore. Taiwan is talking about reunification again and with more liberalization, that may be a reality. The combination of China, Singapore, Taiwan, and Hong Kong could be a very formidable ecomonic entity in the early 21st century, but not in the immediate future. China probably will devalue. The US economy has been perfect. Perfect growth, perfect inflation, perfect employment. This is an unstable situation in my view. Any change must move the economy away from perfect to a slowing or overheating economy, inflation or deflation. Asia could very well be the catalyst for this. Movement of money from the US equities market to other sectors such as Asia, real estate, bonds, etc. could result in a major correction in US markets. Baby boomers aren't stupid (most anyway). They aren't going to keep on paying ridiculous prices for US stocks. I believe demand is the key to fixing the supply/demand imbalance in the semiconductor industry. The key to demand is as you said development of new block buster applications that will require a new generation of CPUs, and hundreds or thousands of MB of DRAM. I see several potential areas: 1. Wide band internet access 2. Voice controlled operating systems (WINDOWS 2000 or 2002 maybe) 3. Affordable flat screen monitors that can be seen in the daylight where they will be most used. Their utility is greatly diminished if I can only use them in an office or airplane. 4. Completely integrated home computer, accessed from any where in the house or work area. 5. Robots and Smart Appliances. Actually these could be controlled by number 2 via number 4 above. 6. PCS. When the long distance providers, local phone and celluar providers quit protecting their current turfs and get on with full scale competition, prices will fall to the point where everybody has it. John (filling in for Teri who has a cold)

To: Ramsey Su who wrote (6194)	7/5/1998 2:53:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 10921

Hashimoto seen backtracking on Japan tax plan 01:44 p.m Jul 05, 1998 Eastern By George Nishiyama TOKYO (Reuters) - Japanese Prime Minister Ryutaro Hashimoto Sunday said permanent income tax cuts were still just a debate, dashing world financial market hopes of swift measures to revive the nation's economy. In a political embarrassment for the prime minister one week before July 12 national elections, Hashimoto was forced to put to rest campaign comments last week interpreted as meaning permanent income tax cuts were possible after the poll. Hashimoto made the comments Friday, a day after Japan went some way toward answering global demands for action with a plan to clear 77 trillion yen ($546 billion) of problem loans through ''bridge banks'' that would take over failed institutions. ''I never said permanent tax cuts,'' Hashimoto told Television Asahi on Sunday. ''I just said we would review the tax system to make permanent reforms.'' ''Of course, I don't think as a result of the reforms, we would end up with a tax rise, but I can't guarantee a tax cut, it's possible it might also be neutral,'' he added. Later in the day, LDP Secretary-General Koichi Kato told reporters that tax reform measures would probably result in a net 100 billion to 200 billion yen in tax cuts. Kato also said the government will not need to issue additional deficit-covering bonds to make up an expected revenue shortfall resulting from the cuts. Hashimoto, whose political survival depends on how his Liberal Democratic Party (LDP) fares in the poll, was forced into admitting the tax issue was still open under grilling by reporters and opposition leaders on television talk shows. Although markets were briefly cheered by Hashimoto's comments Friday, they held back from a major rally, fearing his words were an election ploy that would not be carried through. Hashimoto, who denied his comments were election-related, said the misinterpretation of his remarks was due to his long-held view that tax reform was needed. Saturday, Foreign Minister Keizo Obuchi appeared to back up interpretations of the remarks as meaning permanent tax cuts were on the way, a view splashed on newspaper front pages. ''The prime minister himself mentioned making tax cuts permanent. He also mentioned lowering corporate taxes to global standards ... we must keep a public promise made by our prime minister during campaigning,'' Obuchi said at a joint news conference with U.S. Secretary of State Madeleine Albright. But in a comment that raised questions about disarray in economic policymaking, LDP's Kato said Obuchi ''misunderstood'' his prime minister's remarks. ''Mr. Obuchi may have been influenced by newspaper reports and misunderstood his prime minister's comments,'' Kato told Television Asahi. The appearance, at least, of disarray was bad news for Hashimoto as Japan heads into the last week of campaigning for an election that will elect half of the 252 Upper House seats. Hashimoto needs to win half of the seats -- 64 -- to keep economic policies moving and head off an LDP leadership battle. The LDP, which has a comfortable majority in the decisive Lower House, is eight seats short of an Upper House majority which would allow swift legislation on the economy. ''The prime minister's comfort zone is 64 to 69 seats or more,'' a junior LDP parliamentarian told Reuters. ''Under 61, which is what the LDP has at present, and we could be in for political turmoil that will effect economic plans.'' If tax cuts are implemented, they would likely bring the maximum combined rate for national and local income taxes -- one of the highest in the industrialised world at about 65 percent -- down to some 50 percent, Japanese media reported. They said two programs were possible: a combination of two trillion yen worth of special income tax cuts for 1999 and the same in permanent cuts; or introduction of double that in permanent tax cuts. However, it is unlikely the minimum taxable income would be lowered as it would draw fire as benefiting the rich at the expense of the poor, they said. ''Frankly I would not be confident lowering the minimum taxable income,'' Hashimoto told Fuji Television. Copyright 1998 Reuters Limited. All rights reserved.