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

To: Ramsey Su who wrote (7443)	11/9/1998 5:43:00 PM
From: Lee	Respond to of 9980

Hi Thread, I've been out for awhile, and unfortunately not keeping up with things here like I desire. For those of you who have not read Makin's latest here is a quote and a link. Its a pretty good, if dire, reading. Quote: "The U.S. recession that follows the investment-led recovery will probably be unusually long—that is, U-shaped instead of V-shaped—and unusually unresponsive to easier monetary conditions. Once a manager has built one too many factories, that last factory cannot be laid off if demand for its products does not grow. Rather, the factory manager must simply wait for demand to reemerge while minimizing costs. Such cost minimization includes building no more factories and minimizing the number of workers in the factory. At the close of investment-led recoveries, the scarce commodity is demand, not supply. Central banks normally try to stimulate demand by reducing interest rates, but if expected prices are falling more rapidly than interest rates, demand does not recover. Beyond that, investment is driven by expectations of future profits, which may or may not rise as interest rates are cut. The Japanese economy has been through this cycle over the past five years and, as a result of the failure to recognize it, now has an insolvent banking system. Americans can probably console themselves with the notion that the Fed will not allow this situation to emerge, as it does understand the process." aei.org Regards, Lee

To: Ramsey Su who wrote (7443)	11/9/1998 5:51:00 PM
From: Lee	Read Replies (1) \| Respond to of 9980

To: nahd (1009 ) From: Lee Monday, Nov 9 1998 5:51PM ET Reply # of 1011 Thread, And for those free market thinkers: "The causes of this crisis can be traced to sources distinctly inconsistent with free markets and unfettered global capital flows in both directions. The International Monetary Fund must shoulder much of the blame for discrediting free markets and unfettered global capital flows. That institution, along with the U.S. Treasury, engineered an extravagant bailout for Mexico after it had followed distinctly nonmarket policies leading up to the 1994 election. The Mexican bailout and the self-congratulation by the IMF and the U.S. Treasury in 1995 created a massive problem of moral hazard that turbocharged additional flows of private capital into Asia, Russia, and Latin America. Those capital flows contributed to the creation of massive excess capacity alongside grossly unrealistic expectations about the return on investments. " aei.org Cheers, Lee