> Hi Dennis --
> What you give us is a forecast of just the sort of geographical shift
> in the capitalist center that we have seen several times in the past.
> I have mentioned to you my reservations WRT to the Japanese banking
> system and its capability to play the role envisioned, reservations
> which you choose to disregard. There is also the problem that
> knowledge that a security is over- (or under-) valued is not in itself
> grounds to predict a correction within any particular time frame.
> Nevertheless I agree with your main thrust.
>
> For me I guess the real question is whether a geographical shift is
> possible at this time. The Japanese seem altogether too irresponsible
> and too willing to put up with opaque accounting (their banks have
> hidden losses, not on their books, of over $500b) to be reliable
> custodians of the world economy. Also, while their export sectors are
> ahead of ours, especially with the artificially low valuation of the
> yen, the purely domestic sectors of their economy are actually quite
> primitive.
>
> While the euro may well be the innovation that makes Europe the
> capitalist center once again, the experiment has yet to begin. In
> addition, Britain is not joining the monetary union and cities like
> Paris and Frankfurt do not compare with London as financial centers.
> New York is first and Tokyo is a poor third worldwide. The strength
> of both Europe and Japan is in manufacturing, and manufacturing by
> itself does not lead to any particular advantage in the world
> competition to be the capitalist center, a point made by the devotion
> of Venice to manufacturing after its period of dominance had ended and
> the more recent failure of Germany to make its manufacturing
> excellence count. The center has always been pre-eminant in finance.
>
> So there are doubts as to the ability of the capitalist center to move
> at this time. However, these may just be my prejudices from the point
> of view of the old relative to the new. If the center cannot move,
> does it mean that the system will finally collapse this time? If so,
> will this involve a political shift to the left or to the right?
> There are lots of open questions.
>
> In solidarity
> Dave
>
> ----------
> From: Dennis R Redmond[SMTP:[EMAIL PROTECTED]]
> Sent: Wednesday, February 25, 1998 4:28 PM
> To: [EMAIL PROTECTED]
> Subject: Greenspan drops the Bomb
>
> On Wed, 25 Feb 1998, Doug Henwood cross-posted Greenspan's
> Humphrey-Hawkins
> testimony:
>
> > >But we must be concerned about becoming too complacent about
> evaluating
> > >repayment risks. All too often at this stage of the business cycle,
> the
> > >loans that banks extend later make up a disproportionate share of
> total
> > >nonperforming loans. In addition, quite possibly, twelve or
> eighteen
> > >months hence, some of the securities purchased on the market could
> be
> > >looked upon with some regret by investors.
>
> Jesus creeping shit -- this is pretty amazing, coming from Greenspan,
> whose speeches are usually extended exercises in localized
> anaesthesia.
> Well, he *ought* to be mourning the Pacific canary in the global mine
> --
> given the sluggishness of inflation and falling producer prices, real
> interest rates are the highest they've been in years, at the same time
> that the entire US economy is one vast gigantic betting pool that the
> Dow
> will zoom to 49 million. Things could get really ugly really quickly,
> what
> with multiple credit crashes, Pacific deflation, credit card bust-ups,
> Indonesian defaults, etc., unless the Fed decides to lower interest
> rates
> in a hurry. Of course, if they do, it's sayonara to the US dollar
> bubble,
> hello to the euro-yen hegemony. Our ruling class is getting very
> nervous
> indeed.
>
> -- Dennis
>
>
>
>
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