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

To: Robert Douglas who wrote (544)	9/2/1998 11:33:00 AM
From: Paul Berliner	Read Replies (1) \| Respond to of 3536

If Malpass thinks a strong dollar is at 'the heart' of the global currency problem then he's either extremely naive or a poor economist. The heart of the global currency problem is the falling commodity prices, which has sliced several countries' cash flows in half. Witness Russia, Chile, S. Africa and Venezuela. How could Russian service their debt and pay salaries when they receive half the price per/Bbl. of oil than they did a year ago? This has caused economic problems in these countries and thus the currencies became overvalued. Their major trade partners are then negatively affected, and the dominos fall. At the root of it all, who's ultimately responsible for the falling commodity prices and everything in it's wake? Japan. Hard asset respomsibilities: Oil & metals. Soft asset repsonsiblities: Grains & livestock. And as we all know, the root of Japan's problems is the huge # of non-performing loans held by their banks. And that problem, ignored and teased for years was the original spark that ignited the fire. A strong dollar is an effect of the above mentioned events, not the cause.

To: Robert Douglas who wrote (544)	9/2/1998 12:16:00 PM
From: GUSTAVE JAEGER	Respond to of 3536

Hi Bob, I just read your article... Frankly, who cares about gold today? Gold has become just another commodity! When geopolitical tensions worsen somewhere in the world, people rush to the greenback for a safe haven. Further, besides a few Indian maharadja families, gold has no appeal... Overall, as far as commodities are concerned, I think that worldwide growth is expected to come from industrialized countries or --at best-- from industrializing countries (Latam, Asia). Nobody cares about cocoa and rubber prices to feed the global economy of the XXIst century! That's been wonderfully summed up in Clinton's catch-phrase: ''Trade rather than Aid''. I know there're still a lot of countries that depend on one or two essential crops (copper for Chile, cocoa for the Ivory Coast, oil for Venezuela, Russia,...) but for these countries to rely on such a commodity-driven economy doesn't make sense anymore! I mean we're entering the Information Age, aren't we? Exporting bananas to pay for laptop computers? Nonsense. Regarding this stable dollar vs. strong dollar divide, I must tell you that nothing frightens more the European establishment than a weaker dollar: hey! Europe can't count on the high-tech sector to fuel over 30% of its economic growth! If the dollar falls then Europe's industrial businesses will get hurt. Next, there's China: as this continental economy develops, it will have an increasing interest in expanding in the US market. Right now, China's already the largest buyer of US Treasury bonds: it has to be so, if it wants to give Americans enough purchasing power to buy ''made in China'' gizmos! Regards, Gustave.