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To: Sergio R. Mejia who wrote (20944)	10/7/1998 10:24:00 AM
From: long-gone	Read Replies (1) \| Respond to of 116825

RE 320-325 POG I don't know, That was with a strong US dollar, with it at 124 Yen =$1 you can bet you can bet there is a lot of Japanese stepping up to the plate RFN. richard

To: Sergio R. Mejia who wrote (20944)	10/7/1998 10:59:00 AM
From: Alex	Respond to of 116825

World Bank, IMF unsure of the answers ANALYSIS by P.P. McGUINNESS The annual meeting of the International Monetary Fund and the World Bank in Washington has revealed a lack of any certainty among international economic policy makers on the appropriate response to the growing international financial crisis and threat of recession. The meeting, which ends today, also revealed a growing divergence in public between the two. The World Bank president, Mr James Wolfensohn, has emphasised the importance of dealing with unemployment as a prerequisite of continuing political stability. The IMF still insists on the priority of stabilising currencies. But underlying this disagreement is a more vital challenge to the structure and working of the IMF. There is a school of thought, especially in the United States, that the IMF has outlived its usefulness and is searching for a role in a world of variable exchange rates, doing harm in the process by encouraging lenders to think they will be bailed out by IMF and national central bank action. The rescue of the US hedge fund Long-Term Capital Management, while financed by its investors and owners, was orchestrated by US and IMF authorities for the sake of the stability of the international financial system. Thus it is seen as encouraging the sheer recklessness of many of the supposedly expert banks and funds which channelled their money into this once glamorous fund, now seen to have been little better than a high-stakes gambler, without even asking questions. There is little doubt the IMF will survive, but it is likely to see the most radical restructuring of its role, and the role of the US relative to it, since its creation at the 1944 Bretton Woods conference. At that time the US was clearly going to dominate the postwar world financially and economically. But the Bretton Woods system of fixed exchange rates collapsed in 1971, the world balance of economic power changed radically several times, and the US had for a long time been under challenge. It is no accident that the IMF's managing director has traditionally not been an American. For years Japan and European nations have seen themselves as under-represented in the IMF 's power structure. They have held off any strong pressure because the US has always been the essential funding source. But now the refusal of the US Congress to supplement the IMF's resources has weakened the power of the US Government to call the tune. While Japan is in trouble, the European Union - in economic terms - is strong, growing and in a position to demand a much greater share in voting power and management of the fund. Moreover, the EU is moving towards a currency union which will, provided fiscal and monetary policies of participating members are properly co-ordinated, overcome the problem of short-term capital flows sloshing around in pursuit of interest differentials and hoped-for exchange rate changes. We are a long way from seeing a world with a single currency, but this is the only long-term solution for the problem of volatile international capital movements. A single currency world would be one with effectively fixed exchange rates, approximating the idealised gold standard system. There is a need for the IMF and national central banks to deal with the threat of deflation by stimulating their own domestic economies. The virtual disappearance of inflation in developed market economies makes this relatively easy. But there is a risk emerging economies will seek refuge in capital controls, which may be justified as emergency measures, but have a tendency to remain. If so they will encourage illegal capital flight and the growth of grey and black currency markets, while discouraging investment in nations where it is sorely needed. smh.com.au