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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Lee who wrote (432)	8/20/1998 9:47:00 AM
From: Chip McVickar	Respond to of 3536

Hi Lee, Be sure to read the articles in the Wall Street Journal 20th Aug page A14 They address this subject you have brought up....."at the end of this crisis, we will not know the answer and there will be plenty of stronge opinions." Shelton's article and her book "Money Meltdown" are an excellant contrasting points-of-view against the Policy structures of the IMF bureaucrats. I believe the electronic systems that the Free-market players have created and use to their advantage has effectively reduced and rendered the IMF's old policies as ineffective in dealing with these new free-market systems of trading currencies. Particularly the explotes of brilliant short-term hedge fund currency traders. These players were well established in south east Asia before the IMF walked in and knew how to capitalise on the older systematic policies of the IMF....these players have figured out how to capitalise almost instantly....with impunity. Russia has become another casualty of free market trading sytsems and the players have reeped hudge profits in the turmoil of the market. Now....Hong Kong (2nd article-Yam) has come under the same hedge-fund traders powerful assult and this is another experiment to see if H.K.'s currency board system can with stand the pressure....we shall see. Down the road we can also watch the new ECU countries currency come under the same free-market pressures. One of the on-going questions will be what anchors this currency..? Basket of commodities....gold or will it be a floating currency or pegged to exchange rate spreads as is common today. Again this is all backed by the fundamental strength of the countries economies, their politics and debt balances. My opinion....is that Germany will not abandon it's stronge currency to the open pressures of a free-market system without guarrenties of stability which may require some form of a fixed currency anchor. Either as a basket of commodities or with a stronge gold anchor. How can they watch what is taking place and not be terrified about attaching themselves to Italy and France......? (Not many people agree with me on this.) If this currency is backed by some form of hard anchor the U.S. dollar would come under significant pressure. We Shall See......Most likely it will be a floated currency and the "Free-Market System Traders" will lick-their-chops. Chip