Erdman's logic sounds convincing. Can anybody explain why Erdman's scenario
_won't_ happen or how the global money fixers will smooth it over if it does?
Financial columnist Paul Erdman wrote,
"Next to go will be the peg linking the Hong Kong dollar to the U.S. dollar
at HK 7.74. This for two reasons. As a result of Asian devaluations now
averaging almost 50 percent, Hong Kong's competitive position in export
markets where its products often go head to head against goods
produced in Southeast Asia, South Korea and Japan, has been severely
undermined.
"As if that were not bad enough for Hong Kong based businesses, now
short-term interest rates have skyrocketed to over 10 percent as part of
the effort to convince investors to stay in Hong Kong dollars. Both
problems can be "cured" only if the government abandons the peg.
"My guess is that this will happen within the next 30 days. The Hong Kong
dollar will then go into free fall, sending yet another shock wave around
the world that will hardly help financial markets from Tokyo to New
York."
Regards,
Tom Walker
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Know Ware Communications
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