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Non-Tech : Derivatives: Darth Vader's Revenge -- Ignore unavailable to you. Want to Upgrade?

To: EPS who wrote (418)	10/6/1998 9:34:00 PM
From: ahhaha	Read Replies (1) \| Respond to of 2794

I said all that 8 months ago. Reynolds and I are from a similar school of thought. The only further element that I add is that Japan must change its economic orientation while it buys time with pumped money. I might also add that the multiplier isn't all that levered. Japan money supply is still growing too slowly as is the base. They need to run the base at least at 10%. So far their approach has been rate push. That won't work. You gotta pump. Fiat create. Japan won't do this because they fear their neo-mercantilist empire will disappear because pumping will cause the yen to rise against the dollar. The latter claim would surprise a lot of people, but it is enough to see that strong pumping would cause Japanese short rates to rise. That brings about a disintermediation effect. The last thing the Japanese want is a rising yen. It means their competitive position goes out the window. Notice the damage control the MOF is doing by taking steps to encourage Japanese to buy Asian? That's part of a smokescreen. Mostly they don't want Japanese to buy American. That would strengthen the yen against the dollar and hurt their competitive position vis-a-vis the US where the big volume of trade still takes place. They know they can compete against us. They know they can't compete against other Asia, so they play one against the other to preserve their secure turf. This strategy is wrong and must be abandoned. Japan must face the fact that they are no longer the premier competitor in basic industry. They have to change to the new industries of the information revolution. I haven't heard as much as a whisper about this from any Japanese authority. The implication is that they will go down with the setting sun pulling the rest of the world with them. Before that occurs, there will be the pseudo-recovery. They will dance according to the song played by Rubin, Summers, and Yellin. And inevitably, maybe in desperation, they will pump.

To: EPS who wrote (418)	10/7/1998 4:47:00 PM
From: EPS	Read Replies (1) \| Respond to of 2794

IMM currency futures end up sharply, yen explodes CHICAGO, Oct 7 (Reuters) - IMM currency futures closed erratic pit trading sharply higher, with the yen exploding upward to huge daily gains in quick trade. Volume in yen was estimated at a heavy 64,645 contracts after hectic action that brokers said featured periods of fast-market trade tied to near-panicked interbank conditions. December yen futures settled up $0.000666 at $0.008387 after it backed off from the session peak at $0.008500. Wednesday's single-session yen surge was largest in the life of the December 1998 contract and among the biggest one-day, unidirectional swings in recent memory, brokers said. The Chicago Mercantile Exchange said it had no records based on the biggest net daily change for currencies. Players contacted in futures and cash markets linked the yen's stunning rise to persistent rumors that a large hedge fund continued to liquidate big short yen positions. ''I think it's got to be a huge underlying position...this hedge fund is closing out,'' said Earl Johnson, foreign exchange economist, Bank of Montreal. ''It's almost a panic move.'' ''It's a lot of that (rumor) and it's just been a lot of riding the wave,'' said a floor broker at a commission house. (Note: this article is ''in progress''; there will likely be an update soon.)