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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (30804)	8/8/1998 4:54:00 PM
From: Defrocked	Respond to of 132070

Earlie, Quit teasing me with all this impeccable bearish logic.<g>

To: Earlie who wrote (30804)	8/10/1998 11:50:00 AM
From: cardcounter	Read Replies (1) \| Respond to of 132070

I disagree with your treasury repatriation scenario. If things continue to deteriorate (asia) or at least pple have that impression, then the 'flight to quality' should prevail (even with Japan hiking rates-- assuming they'll bite the bullet in a meaningful way). Japanese citizens are already hunkering down as it is (7yrs going on 8) I don't think they'll decide to keep a larger chunk of money in country esp. after the higher rates cause the Nikkei to tank below the 15,000 panic point (lotsa banks/financial institutions will be technically bankrupt). Furthermore, I don't believe that the added liquidity (assumin that pple keep the money incountry) will be delved out by the banks in a meaningful manner. Rates are really low there, but no one is lending money because the banks have been hurt by so many bad debts. So they'll keep the added money to add to their reserves (esp. when the stock market goes down, or at least the stock values of the financial institutions given higher int. rates). I don't expect the bridge bank to significantly alleviate this problem, since I think its rather underfunded. Japan may threaten to dump the treasuries (maybe to blackmail the US into propping up their currency) but they'd only be screwing themselves over. I'm under the impression that when the Japanese decide to buy/sell a market, that they do so in a major way. The traders on the other end would low ball em on the prices and pick up lotsa 'quality' wares. Yields would temporarily move upward, but I don't think china would follow. I'm guessin that china's central bank has a big chunk of that ownership, and so there would be no advantage to dumping much needed reserves into an oversold treasury market. I agree that europe (i'm hesitant on germany because of their russia exposure... russia will fall if china devalues) is a safe spot, esp. if china/hk devalue.