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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Henry Volquardsen who wrote (1690)	5/26/1999 12:44:00 PM
From: Sam	Read Replies (2) \| Respond to of 3536

Henry, <<But you bring up another issue that has been one of my favorite soapboxes. Internal growth vs export reliance. I am a strong believer that the emerging markets need to adopt policies that will help build a middle class. The benefits would be several but an important one would be the development of a large enough supply of domestic capital to create a self financing domestic capital market and lessen the reliance on foreign capital.... A prosperous middle class is vital for a stable economy. The political benefits are also important.>> I knew I liked you. During the first 4 or 5 months of the existence of the Asian Thread when we were spending a LOT of time both trying to diagnose the roots of and find possible solutions to the Asian crisis, I repeated that theme so often that I was beginning to embarass even myself before more or less toning it down. I'm so glad to read it from someone else, especially from one not economically challenged. And a Greenwich native no less!<vbg> Best, Sam

To: Henry Volquardsen who wrote (1690)	5/26/1999 1:49:00 PM
From: X Y Zebra	Read Replies (1) \| Respond to of 3536

The very wealthy tend to be trans national and much more apt to leave the local market. Middle class investors tend to be more concerned about currency risk and keep their capital where they intend to spend the rest of their lives. A prosperous middle class is vital for a stable economy. Agreed, however, as we have discussed before, corruption (á la third world) has become a great stumbling block for the success of said middle class. (and for the proper functioning of free markets). I suspect that such middle class, slowly will begin to move their hard earned funds into US Dollar based assets, since many are convinced that saving in their corresponding local currencies is an exercise in futility given the constant devaluations. For the above to take place openly, in many countries financial reforms, needs to happen. In spite of resistance by the most ardent nationalists, these reforms are beginning to take place. I am referring here to the regular 'middle class' since the more affluent ones do so anyway, (as you suggest), and obviously with discretion. This is starting to become more relevant because the increasingly growing Hispanic population already living in the US will influence (and strengthen) the idea of saving in US Dollar denominated assets to their relatives living in LatAm. The political benefits are also important. Indeed, and the dinosaurs of power in the third world, (example The PRI in Mexico), are most interested that progress and "opening up" does not take place, to the point of the use of violence. (i.e. the Colosio murder, (1994) and subsequent other assassinations in Mexico). Open violence like that has not been common for many years, at least in Mexico. This has changed dramatically for the worse. Will free markets be victorious ? I do not know... I see a tremendous risk coming from the rampant growth in populations of most third world countries.... (pedestrian countries), because this continues to put a great deal of strain upon these countries infrastructures, (therefore efficiency of operations), and the potential desired growth of their middle classes will be greatly reduced. This article, (containing an interview with Colosio's father), gives a glimpse of the power struggle and dramatic renewed violence in Mexico, not seen since the 1920's. latinolink.com Unless this corruption is solved.... the internal growth will be stunned and clouding the full potential of free markets, which to boot, will be blamed as the mothers of all disasters.

To: Henry Volquardsen who wrote (1690)	5/27/1999 11:25:00 AM
From: Ahda	Respond to of 3536

I am going off the topic of social truth into a mathematical one. The external elements that contribute to cost control within a given entities can at the same time be the Achilles heel of those organizations. A currency peg is risky. In supposition I purchase a plant in x nation for a total cost of b dollars. The b changes reduce my initial cost factor of say 6o to my 100 becomes 90 to my one hundred. This impacts my books my labor costs and all. Our system relies in my opinion on the inability of other systems at present to create internal growth. It relies on poverty elsewhere. The end result of this is to me is going to be a deflationary trend in the Us we can't possibly consume the products we are part of creating. We are in my opinion utilizing to full advantage the low cost of other labor. At some point we are going to over produce because we assume that the continued low cost of that labor because of increased employment will generate need. This has already been seen in the commodities that are indicative of world consumption and production combined. I will clarify this as amoutn of jobs to birthrate and poverty it self breeds care of others and less greed. The middle class of America gave us this wonderful appetite to create more need. Wealth has flexibility in keeping its position. At max if you look at ten percent and whittle away the rest slowly you are actually creating less growth. So competition although it creates the best products and greatest benefit from a world standpoint can very well out pace itself in this present day. You can't control political climate in any given country tho we might state we can with a bomb here and there but we can't You cant stop people from other nations on low incomes trying to cross borders to improve their lot. I wonder of our employment figures at lest here in Calif where we have many migrant workers might actually be zero non-employed.