Re: The Hong Kong peg?

["Rosser Jr, John Barkley" <rosserjb@xxxxxxx>]

     Hi folks, I'm back (Barkley Rosser that is).
Have been gone for over five months and have only been
following this discussion for several days, although I have
certainly been following the events in question.  A few
observations:
     1)  What is really holding up the Hong Kong peg is
China.  As long as the PRC does not devalue the yuan, you
will not see Hong Kong undoing its peg, even if that means
running 1000% interest rates.  After all, HK is there now
to serve China, and its capitalists must pay accordingly.
They will get their rewards later if they are good little
boys...
     2)  China and Japan remain the keys, if simply because
of their sheer size and their relationships with the rest
of the world.
     3)  If China does not devalue, one can expect
eventually even the pathetic Indonesian rupiah to bounce
and go up.  After all, these countries were almost all
running current account surpluses (well, not ROK), prior to
the crashes.  Their currencies are all now way undervalued
by any measure, Dornbusch-styly overshooting evident here.
Of course, if the PRC devalues, then there will be another
wave of competitive devaluations and all bets will be off.
This is why Larry Summers was over in Beijing huffing and
puffing so hard to keep the house of cards up, :-).
     4)  Japan remains far larger both as an economy and as
a financial power than all the rest of Asia put together.
It is also in the position of being the US's creditor.  For
all the current love of the $ out there, the US is now the
world's largest debtor and becoming more so increasingly
rapidly by the minute (right, Doug?  How's the book
doing?).  Don't be surprised if the US needs an IMF bailout
soon and is told to "get austere".  It was because of the
Japanese banks' bad loans in ROK that the secondary bailout
was made for ROK.  If Japan goes sour then it could pull
the plug on the US and the whole business.  But, rest easy
global capitalists, the Japanese stock market is currently
surging.  What's up there anyway?  Who knows?
Barkley Rosser (back from Paris)
On Fri, 16 Jan 1998 21:48:39 -0800 Tom Walker
<knowware@xxxxxxxx> wrote:

> Doug Henwood wrote,
>
> >It could happen that way for sure. But Erdman has predicted 3 out of the
> >last 0 depressions.
>
> Quantitatively that looks like a .000 average. But qualitatively it may
> still be better than predicting 0 out of the last 3 depressions.
>
> Regards,
>
> Tom Walker
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--
Rosser Jr, John Barkley
rosserjb@xxxxxxx