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

To: Henry Volquardsen who wrote (6812)	9/30/1998 1:31:00 PM
From: Lee	Read Replies (2) \| Respond to of 9980

Henry, My thoughts would be that each involved in the party share the blame. I guess if we all stand around the punch bowl too long it effects our common sense. You said: "Why are there investments in industries already at global capacity? Because knowledge is imperfect. But free market money has done less of that then government assisted money. Much of the Asia over capacity is the result of directed policies in those countries. Yes free capital moved in as well but the free market was being distorted by local policies." Sorry, they are big boys and should understand sovereign and political risk. I was duped does not cut it. (Sorry to be glib, certainly Asia today was complex in its development, but the end result is the net of many bad decisions.) Regarding AG's comment of sophisticated instruments and the great powers to find the highest rate of return: return is still a factor of risk. Or did he say we have created methods to increase the return relative to risk? It seems in the pursuit of the highest return we increased the risk and are now dealing with those consequences. I love AG, but I still think he lost something there. We face banking crises, a global liquidity crisis, and confidence crises. That our US financial institutions are holding up is quite positive. But please don't give credit for productivity increases to sophisticated financial instruments. A lot of money was made and lost in Asia, and the bad politics were funded by inflows of capital willing to support such behavior. Now we face declining global demand, which implies declining productivity. The productivity growth here in the US is the result of good ideas, dedicated work, and a healthy venture capital industry that resisted, for the most part, the lure of Asia. I only suggest that we call the kettle black, and figure out some methods to keep a handle on the level of risk. Easier said than done of course. Regards, Lee