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To: GST who wrote (36299)	1/24/1999 2:15:00 PM
From: Rob S.	Respond to of 164684

An excellent post on the foreign situation. You lay it out clearly. China knows that if they devalue their currency that it may force other Asian countries to devalue as well and that could lead to a spiraling devaluation crisis. The result of that would be even more people out of work and social turmoil. The free enterprise engine of growth that has been driving their economy is in recession. The only way they can devalue their currency without triggering a deeper world-wide recession, IMO, is by getting the cooperation of their neighbors before hand to accept a modest devaluation rather than face a more drastic one. Japan faces more than an economic problem: a deeply rooted social one. They don't want to reorganize and open up their system to the extent needed to create more open and valid controls on lending practices and competition. This works against the grain of their culture and deeply entrenched power structures. You are more the expert on this situation than I am. While the U.S. is riding both a wave of excess liquidity and rising wages and cheap prices that make consumers more confident and easy to spend or speculate, the effect will end up rolling thorough our economy with the results or lower corporate profits and growth. While I agree with your concerns, I think it is 6-18 months before the effects will percolate through our economy. The US will continue to ride on the high water mark of swelling liquidity, high employment and higher real wages (wages -inflation) for several months and as long as it does, investors appear to be willing to ignore such mundane things as profits. But this will percolate through to cause, in the least, a slowing of growth and profits and major lay-offs. That will trickle down to the average person and turn the high-flying atmosphere cloudy. A major event, such as Chinese Yen devaluation, would trigger a major downturn in the US and the stock market, IMO. That would come as a shock if it happens now.