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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: Tom M who wrote (19601)	8/28/1998 9:17:00 AM
From: IQBAL LATIF	Respond to of 50167

Markets can only work if goal posts are left unchanged-- the changing of goal posts led markets into chaos. When I was writing to you this morning I came up with this idea of ''increased economic black mail potential'' of Russia, if I was a Russian militant or a commie I would be the happiest person to see what the Lenin's and Stalin's were unable to do with their ICBM's the new Russians have achieved softly the capability to black mail the west. The markets have beyond any reason served on platter a reason for continued turmoil until we cough up another 50 billion to buy peace for some time. We need to show resolve and need to show the Russians that their infighting or incapability to rule will not lead the world into deep recession. 'Have not and haves' battle will take a new turn if this fear of spilling of events into eastern Europe are not countered in a systematic manner. The cowardice of money needs to be addressed but this is I know a tall order, but are we ready to compromise our security for fears of some events which may never happen, if this becomes the yardstick fear of death should stop us from nearly every risky sport or outing. Humanity has progressed by fearlessly addressing the core issues not by ducking them, no paper Bund or Matif will be of any use if Russia disintegrates into crisis or fragment going by recent history would see the break of USSR, the only time in modern history where a huge empire was taken out without a single shot being fired. The history of First World War and 2nd World War will give you enough indication that how painful is the breakage of major political entities. I think if USSR can break up quietly without any major upheaval their is no reason that Russians will not learn to govern, why should they give up democracy and why should Russian army with a tradition of non-interference since Czarist times now do something different, if you work on this premises you will see that over blown fears can only be counter productive and not helpful. The coward money needs to know that is George Sorros listening so that he can take this message all over. I think if stock markets keep going down as they were in the morning in Europe FrF and DeM assets will certainly suffer, why how can one keep selling his equity assets and keep the cash in DeM and FrF, the first thing in case of crisis would be to sell equities that is the panic reaction one and the second would be to buy geographically farther assets from Europe, this is the natural development if Russia anarchy is behind this selling. Now Russians since exposure to open market economy have not done that bad for themselves, it is a poor government but the people are relatively well off, the army over a period of seven decades shown an exemplary discipline so the exaggeration relating to Zhirvinski- factor cannot the basis of the excessive fear engulfing the markets. Have Russians acquired Nuclear weapons last night? If market wants to price `Russian fear' and anarchy in the indexes I think in case of emergence of a 'fascist' Russia we all will face different kind of problems, markets are not even worth anything the basic existence is at stake. TB's and Bunds and Matif's are only worth a paper, nations involved in a power struggle with a anarchist nuclear power will have no worth of its paper. Paper is worth the credibility of the nation which signs on it, in turns that credibility is dependent on revenues generated by the nation, a nation whose stock market is busted which leads to ice age of deflation will also be hardly hit as far her paper is concerned look at Russia's paper. We have certain ground rules and goal posts to respect, the irony is that with Russian situation so much exaggerated we are trying to reinvent the field and moving the goal posts, in such a case I will go for different kind of investment I will like to buy some hinterland in Southern Argentina to be saved from terrible happenings of Europe, within present set of economic engagements I will invest in equities. I would see that paper will loose all kind of importance it will be gold and if you see gold going lower nothing can be far from truth that it is anarchy in Russia behind this sell off. To be honest with you it is inability of short sighted fund managers who are unable to grasp the full picture that they exit like herds and reenter like fools. Imagine some young good looking smart Fund Manager trained with charts and Technical breakdown will going to give in to this new kind of threat, the threat of nuclear blackmail. However if we scratch the surface you will see this is a non-existent threat, the situation presently is default of Russia and we need to focus on that only, a default of nuclear nation or a non-nuclear nation should be dealt with equal intensity but not lop sided fear. It is a shame that WSJ highlights this on its front page as a potential threat without an equally strong op-ed opinion or counter argument as to the need and importance of alleviating these threats. The markets have been made a circus but such is the impact of a new integrated economic world order . Giving into threats or highlighting weaknesses like this can have very far reaching consequences strategically. Have Russia acquired this annihilation of world potential since last week? I would think that the market pundits have to show a little more stand against this kind of fear, if this rot does not stop nothing will be safe, to save markets from a perpetual blackmail that best answer would be to ignore these threats and focus on fundamentals, wrong focus can lead to very serious consequences. I remember attitude of Saddam Hussein, once he learnt to blackmail the emirate of Kuwait he never turned his back, 1st Aug 1990 was just the drop scene of a long behind the doors blackmail where 30 billion $ were illegally extorted from the gulf states.. Russians have got a similar message, the new PM is telling everyone ''apres moi deluge' and the global markets are falling into this trap, in my opinion the global markets need to discount this threat otherwise every state of the world will think the best way to extort is to acquire nuclear capability, this is giving in to nuclear black mail the fascists and anarchists will be dealt the way terrorists like laden or fascists like Hitler has been dealt we need to see that Russians put their act together, they need money they would be required to show that they know how to use it, we cannot throw tax payers money to save the future of `coward money' or for newly rich Russians enjoying in French Cote d' Azur.