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

To: Sam who wrote (6436)	9/15/1998 5:17:00 PM
From: the Druid	Read Replies (1) \| Respond to of 9980

TO ALL: China launches crackdown on capital flight BEIJING, Sept 15 (AFP) - China said Tuesday it had launched a crackdown on illegal foreign exchange dealings in an attempt to stop capital flight out of the country and a repeat of the crises in Southeast Asia and Russia. "The growth of illegal dealings in foreign exchange is a result of the influence of the external economic environment and has already exerted a negative impact on China's foreign exchange balance," a spokesman for the State Administration of Foreign Exchange (SAFE) told state television. "We have a firm determination to fight against illegal activities such as breaches of exchange regulations or purchasing foreign exchange with the help of forged documents," he added. Despite repeated guarantees from China that it will not devalue its yuan, fears of such a move have prompted many busineses to move their assets out of the country and into a hard currency. "People must be aware of the dangers to the state's economic security from illegal trading in foreign exchange," the spokesman said. "We must draw lessons from the recent financial crises in Southeast Asia and Russia which partly stemmed from uncontrolled foreign exchange dealings ... which caused the outflow of state wealth," he added. SAFE announed two new measures to combat capital flight -- a fines system for financial institutions found to have broken foreign exchange sale and payment regulations; and a computerised network linking customs, banks and foreign exchange control departments so that the flow of goods and foreign exchange can be monitored. But the spokesman said the yuan would continue to be convertible on the current account. "This will not affect the principle of yuan convertibility under the current acount or go back to the past practice of total and rigid foreign exchange control," he said. "Halting the abnormal flow of foreign exchange will better satisfy normal enterprise and individual demands for foreign exchange in the long run."

To: Sam who wrote (6436)	9/16/1998 2:11:00 AM
From: Stitch	Read Replies (2) \| Respond to of 9980

Sam, <<So, rip into what I wrote. What is good about this article?>> Well, it reminded of how stupid suspenders look unless you are wearing waders. And it also prompted me to think a bit more about the whole range of difficulties involved. Truthfully Sam, I should have said in my last post that I thought Sachs was just a hair to the glib for an Economist article. It was more like what you might read in a Reader's Digest. I mean, even I could understand it. To:<<"We now need an international equivalent, to forestall panics in international lending.">> You wrote: <<This strikes me as nonsense.>> What then must we do? Your own post suggested in closing that we cannot afford to sit idly by. I suspect some kind of international governance is required. "International" in the sense that I suspect the G-7 with some outside strategic alliances could pull this off. Everyone else would pretty much have to follow. Note I say this without regard for the difficulties involved. Maybe the only way to even discuss it is to do so glibly if not gleefully. The difficulties in piecing anything like it together are enormous. Best & G Nite, Stitch

To: Sam who wrote (6436)	9/16/1998 11:43:00 AM
From: Robert Douglas	Read Replies (1) \| Respond to of 9980

Sorry there is no URL unless you are a subscriber to "The Economist", something I would consider as valuable as a subscription to the Wall Street Journal and membership in Silicon Investor. <g> You ask what is good about this article? Well, for starters, as Stitch said earlier, it reads like something out of Readers Digest. I have found that most good ideas are easy to explain and don't need to contain letters from the Greek alphabet or results of multi-regression analyses. Now don't get me wrong, I don't agree with all that was said in the article and really the excerpts were meant as teasers and not a synopsis. I do agree with Sachs in several key areas, primarily that "developing countries should impose their own supervisory controls on short-term international borrowing by domestic financial institutions". This was not as you suggested a call for an "international body" to control this, but rather wise council that the most desirable capital for banks to use would be domestic and long term in nature. Perhaps the most appealing thing to me about the article was that it didn't waste time regurgitating a litany of woes and mistakes that have been made. I have lived long enough and read enough history to know that problems become magnified during a crisis and the path through them looks precarious if possible to see at all. In most cases this just isn't so. When I talk with my father, a man in his 80s, he reminds me to look at the 20th century as a whole and marvel at the progress that has been made. He was born in a year that 30 million people died of the flu, raised in the great depression, fought in WWII, watched as Communism was touted as the "future" and then suddenly disappeared, watched American capitalism go through crises in the 1930s and 1970s, lived through a number of banking crises, recessions and inflation. Each of these, he reports, seemed hopeless at its worst. Is he worried about Asia? Not in the least, in fact he just bought some "Asia" mutual funds. For long-term investments! I prefer his perspective to the 25 year olds that Sachs takes to task. -Robert