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To: Ron Bower who wrote (2480)	10/25/1998 1:23:00 AM
From: Tom	Respond to of 2951

Follow-up... This is my concern, that we are reacting. We should be getting together the European Union and Russia in an effort to resolve their problems and I've seen no indications that this is being done. I had hoped you would have a different view. Afraid not. Poor leadership. Just read an article today that suggested sovereign nations will, one day, no longer require leadership. (humph!) That day arrived long ago, as far as I'm concerned. Same sentiment. I believe the Fed (Rubin) and the FRB (AG) dropped the ball when the $US started it's upward movement. They could have prevented much of the capital movement out of the emerging markets that exacerbated the situation. Stopping the USD trend may have been central to the argument rumored between Greenspan and Rubin several weeks back. Here I have drawn an opposing view. Japan has effectively done little to solve their problems. China and the ASEAN countries have bitten the bullet (perhaps not willingly) and are on their way to a recovery. I feel the best course of action would be to ignore Japan and direct emphasis to the developing economies. This would in the long term reduce the dependence on Japan that started the 'crisis'.. Wouldn't that require an effort at least as large as what might be afforded the Russian predicament? Insufficient resources, so the G-7s use what they see as a suitable proxy -- the IMF. We just used different perspectives. Mine being, at the very least, structural reforms for the global financial system. Not a stroke of genius. Much has been said on that subject already. Appears, however, any effectual changes are not even in the design stage. And I see no reason to hope for any. Not until the U.S. economy is also in crisis. Will it? Will the U.S. succumb to the spreading crisis? Who knows? They lie so much about everything. I CAN say, that if they do not stop it in South America, then we'll be in it. And the $30 billion they are planning for Brasil may not be sufficient. I'm not certain what's been disbursed, but they have twice that slated for South Korea! But it's not just Brasil. We're talking about the entire Mercosur -- Brasil, Argentina, Uruguay, and their recently extended associate, Chile. The IMF is going to feed the Brasilian economy and hope the rest survive on the crumbs. With the commodities that fuel the revenues for that region priced as low as they are.... The IMF can only be hoping that the U.S. GDP growth engine doesn't sputter more than a couple of quarters. Also, that there are no more unsavory developments in emerging markets. Brasil is still seeing capital flight of $400 million per day. Inflation has already taken hold in Mexico. And the Fobaproa situation there is a mess. But, getting back to the subject, :) it's difficult for me figuring Japan. Germany - I had not considered Germany's role in all of this and intend to follow their actions closer. Short term, I doubt that they will have an effect, but they are astute 'generational investors' and I'm sure they will be taking advantage of weakness where they can. The Germans have the ability to move an enormous market. A market tentatively larger than ours. Germany has played the spoiler before. They don't mind.

To: Ron Bower who wrote (2480)	10/25/1998 10:15:00 AM
From: Racman	Read Replies (1) \| Respond to of 2951

> On Russia - "I'm certain the Washington think tanks are burning >the midnight oil, developing contingencies." >THis is my concern, that we are reacting. We should be getting >together the European Union and Russia in an effort to resolve >their problems and I've seen no indications that this is being >done. I had hoped you would have a different view. Ron, Isn't it that Russia's largest problem is one that only Russia can resolve on it's own, that being the theft of any assistance given Russia by it's organized crime component? Isn't that why they made it very clear to Clinton prior to his visit that they didn't want him telling them what to do, rather tell them the US would support them in what they decided they needed to do? They've yet to figure out what that might be, hence the uncertainty causing Washington the need for contingencies. Southeast Asia is the priority IMHO. Racman