[PEN-L:770] I told you so.

[knowware@xxxxxxxx (Tom Walker)]

On October 4, I sent the following reply to PEN-L:

Barkley Rosser wrote,

>     The US stock market peaked on July 17 and has been
>sliding since basically.  The Fed's cut was supposed to
>prop it up.  It doesn't look like it's working.  Indeed, it
>is October, the historical month of great crashes, and
>panic finally seems to be seriously setting in.  Hold your
>hats, folks.

This is true enough. But it also has to be remembered that the increased
likelihood of a great crash is only a statistical probability. The G-7
bankers and ministers could well come up with a contingency plan solely to
avert an OCTOBER crash just so that they can declare "victory" on November 1.


>The Vancouver Sun				Friday, October 30, 1998
>
>FINANCIAL CRISIS TAMED, FINANCE MINISTERS SAY
>
>Statement from G 7 countries will highlight some
>of the efforts taken to stabilize the global economy.
>
>	Giles Gherson, Southam Newspapers
>
>OTTAWA ? Finance ministers from the Group of Seven major industrialized
>countries are to issue a 10 page declaration today aimed at reassuring the
>world that the global financial crisis is being tamed.
>	The statement will originate in London, reflecting Britain's chairmanship
>of the G 7 this year, but will be released simultaneously in all seven
>capitals.
>	The declaration will salute a string of unexpectedly positive developments
>in recent weeks that are considered essential to restoring some stability
>to international financial markets.
>	Among the measures the G 7 wants to highlight as evidence of a successful,
>co ordinated effort to quell international financial turbulence are the
>Clinton administration's success in overcoming stiff Republican opposition
>to an $18 billion replenishment of capital for the International Monetary
>Fund. Congress approved the measure last week. As well, the G 7 will pay
>homage to Japan's much delayed passage of its banking reform bills to
>rescue its 19 weakest banks in a S500 billion package, and Brazil's
>agreement this week to an IMF economic program qualifying it for a $30
>billion bailout.
>	The G 7 will also demand that a series of Canadian initiatives pushed by
>Finance Minister Paul Martin be implemented. They include:
>
>	· International peer review of national bank supervision;
>	· A willingness to ease pressure on less developed countries to get rid of
>foreign 	capital controls;
>	· A move to persuade private sector banks and other financial institutions
>to agree 	not to pull short term loans from countries facing capital
>shortages, thereby 	worsening financial crises.
>	
>	The unusual "plain language" G 7 document is a deliberate public relations
>effort to counter widespread criticism earlier in the year that the body
>has been too passive in the face of gyrating currencies, tumbling stock
>markets and spreading economic slowdown.
>	During the summer, as the Asian economic flu spread to Russia and South
>America, threatening the North American economy, the G 7 seemed unable to
>provide visible leadership capable of calming markets. As one G-7 official
>put it: "Golfing season is over and the G 7 ministers and central bankers
>want everyone to know they're back in the saddle."
>
>
>
>
>
>

Regards,

Tom Walker
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