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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Stitch who wrote (5969)	8/27/1998 10:09:00 PM
From: Dayuhan	Read Replies (1) \| Respond to of 9980

Stitch, <<It focuses attention away from their own sins.>> Americans seem to take singular pleasure in wallowing in theirs. I suggested recently on another thread that a moment of worldwide crisis might be an inopportune time for an impeachment trial. The prompt response: "a few cruise missiles don't constitute a crisis". I wonder how many other Americans are still unaware that what we call "the crisis" exists? Steve

To: Stitch who wrote (5969)	8/29/1998 11:45:00 AM
From: Worswick	Read Replies (1) \| Respond to of 9980

You wrote, "I have to say that Asian leaders wouldn't give a rat's ass if Clinton shagged every secretary in the White House." NO. No. No. These women around Clinton aren't the Secretaries... rather they are the low paid "believers", that and the the volunteer political ladies in our government strutcture. The are called called "Muffins". They are Muffins. Slick has been boffing the Muffins. Got that? The Third Shoe For Private Use Only "There's a monster out there By Paul E. Erdman, CBS MarketWatch Last Update: 12:25 PM ET Aug 28, 1998 See StockWatch SAN FRANCISCO (CBS.MW) -- In the face of what may become the most severe global financial crisis since World War II, so far the world's key financial institutions have been able to cope rather well. To be sure, some, like Credit Suisse, have taken big-time haircuts, but nothing that would threaten their survival. So far only the first shoe has dropped, involving, for example, writedowns of bad loans to Russia and of Russian notes and bonds. If the situations in Eastern Europe and Latin America deteriorate further, more writeoffs of this type will gradually become necessary. But the nature and size of these risks are generally known, and are deemed manageable. However, there is a related type of bank exposure that is essentially invisible. It is off the balance sheet, and basically uncontrolled. I'm talking about derivatives, especially hedges in the form of forward foreign exchange contracts and interest rate swaps. Such exposure in Russia alone is more or less "known" to be in the $65 billion range.. What is unknown is who is at the end of the daisy chain where such transactions are concerned. If too many end up at the same institution, the question then is whether that institution will be able to cough up when these contracts come due. And if not, then what? (See related story.) We found out way back in 1974. The bank involved was Bank Herstatt of Cologne, Germany. It had to close its doors because it was on the wrong side of too many forward foreign exchange contracts that had suddenly come home to roost. Its closure took place after the settlement of the deutsche mark leg of foreign exchange transactions, but before settlement of the dollar leg. In other words, American banks doing business with Herstatt did not get the dollars they were due after they had already paid the marks they owed the German bank. Some of Herstatt's trading partners, faced with nonpayment, then refused to make payments on their own account or for customers. The result was a chain reaction that, in essence, froze transfers between banks, and brought the whole global financial system to a halt. This became known as "the Herstatt Effect." With today's volume of such transactions immeasurably greater than it was back then, and with currencies under increasing pressure on every continent on earth, one has to wonder whether another Herstatt is lurking out there. And....in case you missed it. Excuses abound, but the U.S.-led boom is over By Paul E. Erdman, CBS MarketWatch Last Update: 7:45 PM ET Jul 29, 1998 StockWatch SAN FRANCISCO (CBS.MW) -- The recent uncertainty on Wall Street relates in part to the growing impression that economic growth is now slowing on a global scale, with its inevitable consequences down the road for corporate profits. The three and a half engines of growth in today's world are the United States, Japan, Germany -- the "half" being Britain. Japan's Gerald Ford? Japan is in recession, and the outlook is nothing short of bleak. Not one to induce systemic change, the new premier, Keizo Obuchi, is a loyal member of the ruling clique that presided over the decline and fall of the Japanese economy in the 1990's. His move to bring in 78-year-old former Prime Minister Kiichi Miyazawa as his finance minister is a bad joke. That would be like bringing back former President Gerald Ford to replace Robert Rubin. Germany had a spurt of growth in the first quarter of this year, and then no growth at all in the second quarter. Germany is much more dependent on exports as an engine of growth than we are. As the global economy slows, that engine will increasingly sputter. So will the German economy. And as goes Germany, so goes the 15-member European Union. At that....more... Britain's economy and sterling have been the star performers in Europe in recent years. But as one of London's Financial Times columnists put it today: "The end is nigh for both." B of A's London based economist adds: "Recession talk is becoming more vocal." In the U.S., the dramatic surge of growth in the first quarter has turned into no growth in the second. The search for "excuses" abound, but the basic truth is that the American economic boom is over. Where and when it bottoms out is anybody's guess. For what its worth, my guess is short of recession. So we are seeing a paradigm shift -- back to where it always has been. Capitalism is cyclical in nature. We are now entering a down phase in that cycle on a global scale".