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To: edde who wrote (15924)	8/15/1998 8:59:00 AM
From: Giraffe	Read Replies (1) \| Respond to of 116764

Anyone getting depressed about Friday's XAU should check out Kaplan's latest column. He thinks gold is getting ready to rock. investor1.com

To: edde who wrote (15924)	8/15/1998 1:59:00 PM
From: Alex	Respond to of 116764

Russia Continues to Provide Banks with Cheap Loans, Cheap Dollars David Lipton Arrives to Hold Things Together for Clinton IF THIS is stability, what would something really nasty look like? Since the West's $22.5 billion bail-out of Russia in late July, almost everything has gone wrong. The stockmarket has plunged: trading was suspended on August 11th and 13th, after shares dropped by more than the permitted 10%. But the equity market, heavily influenced by downturns elsewhere, matters much less to Russia's economic future than the gruesome rise in interest rates for short-term debt. These soared past 150%. The government has now cancelled three planned debt auctions in a row. Tax collection has crept up a little, but nowhere near enough. The hole in public finances, which was meant to be closing, gapes ever wider. The immediate casualty is likely to be the rouble. As money has flowed out of the country, the central bank's reserves are bleeding around $1 billion a week. Its credibility is draining away too. The bank seems secretive and inactive about problems in the banking system; it has, oddly, held the rate at which it lends to banks way below market interest rates, and on August 12th it issued a mysterious pronouncement about limiting currency trading with an unidentified group of troubled banks. This convulsed the already twitchy market. George Soros, an international financier with a keen eye for troubled currencies, added to the pressure on the rouble on August 13 by arguing for a 15-25% devaluation. Mr Soros said the Russians should then set up a currency board, fixing the rouble to some Western currency. He urged a new supporting aid package. Even the IMF now accepts that the chillier global climate means that its current loan programme is insufficient. But what should the next package contain? There are strong arguments against devaluation. It would lessen the rouble debt burden-but also destroy investor confidence. "The government needs that T-bill market," says one well-placed Moscow financier. But if nothing else will satisfy the market, devaluation looks inescapable. The most immediate priority, however, is a purely political one: to preserve the hype surrounding President Bill Clinton's visit at the start of September, billed as a celebration of Russia's new reformist impetus. The top international official of the Treasury Department, David Lipton, arrived in Moscow on August 11th "to ensure that the show stays on the road for the next three weeks at least", says a source. By burning up a lot of other people's money, that is probably feasible. Mr Lipton's other, more difficult, task is to start work on a new bail-out. That will be accompanied by renewed scoldings, penitent promises of better behaviour, and dark threats of instability if the money does not come. Seen the movie already? Too bad. The Economist, August 15-21st, 1998