Re: The Hong Kong peg?

[Rosser Jr, John Barkley]

     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 
<[EMAIL PROTECTED]> 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
[EMAIL PROTECTED]