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

To: Ron Bower who wrote (6937)	10/5/1998 12:11:00 PM
From: Z268	Read Replies (2) \| Respond to of 9980

Straw Poll - World Recession and Dow. Anyone care to speculate on: 1. Probability of a world-wide recession(% and how long)? 2. When will Dow bottom, and at what level? Best, Steve

To: Ron Bower who wrote (6937)	10/5/1998 12:23:00 PM
From: Stitch	Read Replies (1) \| Respond to of 9980

Ron, A most thought provoking post. Where is Zeev? I wanted to ask him if we will see the mini-melt starting today. The IDES of october are upon us I fear. Keep your powder dry my friend. Best, Stitch

To: Ron Bower who wrote (6937)	10/5/1998 1:32:00 PM
From: dougjn	Read Replies (1) \| Respond to of 9980

The really troubling thing, and I think what the market has been digesting beginning since Tuesday's weak Fed rate cut, is that there may not really be all that much the U.S. can do about all this. It may be that the world is going to continue to go through a pretty severe contraction in liquidity and wealth, which will then hit our shores to a signficant degree. (Not as much as in many places, but a lot more than is priced into our markets yet.) It's not at all clear that any amount of money the IMF has any chance of raising will stop the contagion from continuing to spread. It's not at all clear that Japan isn't going to really thud when its sour loan heavy banks, unfixed for a decade of great expansion both in Asia ex Japan and the US, now face a slowdown in both places, and a slowdown of exports to both. It's not at all clear that a Fed easing in the U.S. will final demand in our export partners, faced with global overcapacity. We may need to see a lot of capacity destruction. Which is painful, including to us. There has been an enormous build up paper wealth in the world over the last decade, and it did indeed get overdone. On the surface, the excesses in this country were not too horrendous. Sure the market was overvalued, and by a lot, priced for endlessly continuing excellent times, etc. However, overall around the country real estate prices in most places didn't good too excessively high. Bank lending hasn't been too extended. (Maybe.) But there is turning out to be a lot more derrivates and overseas related leverged bets than people believed. A lot of that is coming out of the system now. I'm thinking out loud and searching for the answers. I don't claim to have a lock on them. Doug

To: Ron Bower who wrote (6937)	10/5/1998 10:17:00 PM
From: Derrick P.	Read Replies (1) \| Respond to of 9980

Ron, With all of the supposed US expertise, why haven't these problems been addressed long before now if they have been so obvious even to the lay people on this thread? Yes, this is the question that I asked myself a few days ago. The obvious choice is that these guys are clueless, but I can't really believe that is true. I think they must have a good idea about what is going on. If we examine the facts: 1. Emerging markets that receive 'help' are encouraged to raise interest rates to stabilize their currencies. These interest rates assure that the economies will crumble into recession. They also attack budget deficits to assure that the countries currency is more stable, again recessionary. The only benefit is the ability to pay off their debt while the people suffer for it. 2. IMF funding from taxpayers is used to help these countries pay off their debt. 3. They recognize the problem, (overcapacity), because they are encouraging non debtor nations to lower interest rates and stimulate their economies by increasing deficit spending. Then the only explanation is that they are bailing out the big financial institutions with the last drop of blood from these emerging markets and whatever they can get from the public taxpayers. I believe that these are the players that back Clinton and he will go to the mat for them on this issue. Now I guess no one wants Citibank to do a LTCM, but why don't they provide more market 'demand' by lowering rates. No one in the bond market agrees with me on that for sure. Maybe they just want to break these markets and then come in and buy up the capacity cheap and then lower rates? That is much more in line with the Government we all know and love. Best Regards, Derrick PS: So I'm a sucker for a good conspiracy theory, it's better than thinking that they're all a bunch of idiots.