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

To: Mark Myword who wrote (7024)	10/9/1998 12:30:00 AM
From: Derrick P.	Read Replies (1) \| Respond to of 9980

Perk, Excellent points IMHO. 2) too much money stolen by corrupt govt. officials and powerful families/cronies, leading to monstrous bad debts, and the obligation to pay the western banks being dumped onto the backs of the helpless masses,... It would probably help if the banks/investors/IMF would stop shovelling the stuff at them as fast as they can. Derrick

To: Mark Myword who wrote (7024)	10/9/1998 2:27:00 PM
From: shadowman	Read Replies (2) \| Respond to of 9980

Perky, Now I know I'm not the only person who see's a direct correlation between overcapacity and under-consumption in some of the newly developing economies. At the obviously exploitive wage levels that most of the work forces in these countries work at, the chances of developing a domestically based demand for the products that these economies manufacture is nil. This situation was all well and good when the export markets were vigorous, nobody seemed to mind...including US banks and multi-national corporations. Now that the chickens are beginning to come home to roost these inequities might actually get a little lip service but I expect not much else. The free marketeer's nirvana of capital flowing to the most cost-effective labor markets may come home to bite them in the a**. Common sense has indicated for many years that healthy economies must include a reasonably prosperous middle or working class...these folks provide most of the consumer power. The idea that distribution of wealth and the inequity of it is not something to be concerned about is ridiculous. I guess it's fine if you live in a isolated economy such as a third world dictatorship with an abundance of exploitable natural resources? Although I'm sure there are many self-interested politicians and "industrialists" who would love to see a readily exploitable low cost labor pool out there in the underdeveloped world....the truth is that economic stability will be elusive until wages are at least at a level where workers have some possibility of becoming consumers of consumer goods. The idea that a few "smart" or well connected people deserve to reap the economic rewards at the expense of the people who produce these goods is and has been a reality that should be addressed. No argument on the micro-economic basis...corrupt business people and politicians along with the cronyism that exist, contributes to the problem. But from a macro-economic stand point...the goose that lay the golden egg....low production costs (low wages) is a double edged sword.

To: Mark Myword who wrote (7024)	10/9/1998 4:34:00 PM
From: Z268	Read Replies (2) \| Respond to of 9980

On the need to create internal demand in Asia. Sounds good on paper, but when you're actually on the ground, it is very different. There is NO social safety net for 99% of people in most Asian countries to feel confident to continue to spend, once the general level of confidence in their economy has evaporated. Consider the example of an average middle class professional in Jakarta pre-crisis: He earns Rp 2M a month (=US800 pre crisis). He gets bonuses equivalent to six months' salary a year during good times (=US4800 pre crisis). His total annual spending power in US$ pre crisis: US$14,400. Pretty impressive huh? Now let's see where he is today: he still gets Rp2M a month (if he is lucky), forget bonuses. His spending power is now US2,400 per annum, or one-sixth of what it was previously. Without a social safety unbrella, do you think he will: 1. Do the right thing for the common good and spend, spend, spend or 2. Deposit all his hard earned savings in the bank at 60% interest p.a.? This is where textbook economics rubber meets the hard bitumen of real life, and it's no contest! Many people I know have essentially stopped spending or business activities, and putting all the money in the bank, with what we know will be fatal consequences for the economy. They seem to be following the example of the Japanese, strangely enough..... Best, Steve.

To: Mark Myword who wrote (7024)	10/10/1998 1:14:00 PM
From: Ramsey Su	Read Replies (3) \| Respond to of 9980

Perky, gone on vacation for a week and it seems like I am returning to a different world. The first thing that I noticed was the yen/USD exchange and thought my computer broke. Something very very fishy going on here. Always the skeptic, I find it hard to believe that our government or Japan or both are not behind some scheme as in the article referenced by Seppo. I don't see how a strong yen could be good for anything, especially the banking crisis. Driving the Nikkei down, their assets just dropped further. The profits from USD denominated instruments just evaporated over night. Of all the opinions floating out there, I find this Makin to be the most consistently accurate. He writes one article a month and September's seems to have the most pertinence on the USD/yen issue. aei.org If you believe what Makin has to say, that we are heading exactly in the wrong direction, further away from any chance of near term recovery. Now if our government has a hand in driving the dollar down to help bail out hedge funds, then we are in for a very very rude awaken when the sh*t hits the fan. Ramsey