As The World Turns (or is it ER...
Sunday September 27, 2:35 am Eastern Time (copied and circulated for educational purposes only... By Sarah Davison HONG KONG, Sept 25 (Reuters) - A huge U.S. bank bailout for a major U.S. hedge fund threw salt in Asia's financial wounds on Friday, where economies continue to collapse due to lack of cash. ``There's no denying the system works in favour of the advantaged,'' said Peter Perkins, strategist at Daiwa Research Institute. ``At the end of the day, the big boys get to say what the rules are.'' At the behest of the Federal Reserve Bank of New York, a group of mainly Wall Street banks coughed up $3.5 billion for Long-Term Capital Management after a bet went badly wrong. LTCM is believed to have borrowed as much as US$100 billion, threatening losses exceeding the entire foreign debt of Thailand or nearly two-thirds of that of South Korea, once the world's 11th largest economy. The banks agreed to recapitalise LTCM, a hedge fund typical of those that fuelled the Asian crisis, while Asia struggles to negotiate debt writedowns from many of the same banks. ``Merrill Lynch or Citibank, they have more flexibility because not many of those guys can go before the whole system crumbles,'' said Perkins. ``But the further out on the periphery you are, the most expendible you are, and places like Thailand are out on the periphery.'' LTCM is already being called a watershed for its dramatic reminder of the force of the global financial crisis, and the severity of the global credit crunch it portends. Once burned by LTCM, banks will be twice shy about investing in hedge funds -- or anything else, for that matter. And the fears of another ticking timebomb a la LTCM will add to that reluctance to lend, fuelling an already critical credit squeeze in those parts of the world worst affected by this global financial crisis. ``Banks will begin to look (more warily) at hedge funds again and we'll have a contraction in global liquidity. We were going to have that anyway, but this will speed it up,'' said another strategist, who declined to be identified. Andy Xie, economist at Morgan Stanley Dean Witter, estimates at least 20 percent of $380 billion in total foreign loans to Asia will go bad, and Europe is especially exposed. So far, banks are rolling over foreign debt and refusing to accept writedowns, but soon writedowns will become inevitable. ``These companies just cannot pay back these loans,'' Xie told Reuters Television. ``As soon as you recognise this, that you are not going to be paid back, you have to write it down. It will take a huge bite out of your capital.'' But the unnamed strategist argued that while credit will certainly become even more scarce in Asia, this region now has less to lose than other regions and could, therefore, benefit. ``Bizarrely, Asia one of better places to be because how can you contract credit any further here? We don't even have a banking system,'' he said. ``The only thing that can happen from here is to rebuild capital and the lending process from here.'' Using Bank for International Settlement figures, this strategist estimated that the world's biggest banks lent more than 129 percent of their capital to global emerging markets, and so far about 30 percent of those loans are non-performing. ``If it's 30 percent, we've just wiped out half the world's bank capital,'' he said, to stress the severity of the impending credit crunch. Asian analysts said U.S. banks bailed out LTCM because they were told to by the Federal Reserve Bank of New York, which abides by a strictly domestic mandate. There is no-one capable of forcing a similar recapitalisation in Asia. ``What the Federal Reserve coordinated was sensible from a U.S. point of view,'' said Dong Tao, economist at Credit Suisse First Boston. ``And the banks have to listen to the Fed.'' -- Hong Kong Newsroom (852) 2843 6441; Fax 2845 0636 -- [EMAIL PROTECTED] Copyright 1998 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. See our Important Disclaimers and Legal Information. Questions or Comments?
Re: rights/responsibilities(Tor)
One important clarification: TF: It is certainly not right to construct a conflict between social justice and ecological concerns! SK: I don't think it is a construction; rather it is reality - the result of very rapid growth both in human numbers and in the impacts of rapid technological change on the planet. -- I strongly support a narrowing of the gap between haves have nots as long as part of the actions include self-empowerment of women for reproductive decisions, contraceptive devices instructions in safe sex, *and* instruction/training of those currently dependent upon relief to be as self-sufficient as possible. The "conflict" in "reality" is that much so-called humanitarian effort serves to increase dependency, increase numbers dependent, increase fertility, and guarantee the need for *more aid* tomorrow. As the aid is finite variable based upon physical systems and economic cycles, the perverse result is *more suffering* tomorrow both quantitatively and qualitatively than would occur if these destructive attempts at aid were not taken. There need not be this "conflict", but religious foreign culture based charities tend to replace original (sustainable) cultures/economies with cash crops or factory labor, thus dependent lives. The medicine sent was addictive poison. Steve
4 horsemen for real :-(
African Population Projection Falls By David Briscoe Associated Press Writer Saturday, September 26, 1998; 6:00 p.m. EDT WASHINGTON (AP) -- Population experts now believe that several African countries may achieve zero population growth in just a few years. But family planners are not cheering. The reasons are gruesome and worrisome: populations devastated by AIDS and further threatened with food shortages, water depletion, ecological collapse and social chaos. Family planners have been trying for decades to halt the population explosion in countries projected to double or triple populations by 2050. But they didn't want it to happen this way. They don't want allies that kill and destroy societies. ``A lot of countries will not see expected population increases because of rising death rates,'' said Lester Brown, president of World Watch and author of a new report on world population problems. Revised United Nations projections for population growth will be out at the end of October, and U.N. demographers confirm that the impact of AIDS in some African countries will be dramatic, even ``unbelievable.'' AIDS, which killed 2.3 million adults and children last year, will not slow worldwide population growth, however. That will reach 6 billion by the middle of next year and is expected to rise to between 7.7 billion and 11 billion by 2050. (snip) Anyone wanting complete article, email me. Steve Source: free population news list- NPG Population-News Listserve http://www.npg.org To subscribe: send e-mail to [EMAIL PROTECTED] with the message text: subscribe population-news -
Tragedy repeats itself -The HINDU Times Sept 26 (fwd)
-- Forwarded message -- Date: Sun, 27 Sep 1998 10:36:33 + From: "Janet M. Eaton" [EMAIL PROTECTED] To: [EMAIL PROTECTED] Subject: Tragedy repeats itself -The HINDU Times Sept 26 " Without introducing capital controls and without reasserting democratic controls over our sources of livelihood, we risk deepening the economic depression. To advocate fiscal restraint and staying the course of market reforms is like Marie Antoinette advising hungry Parisians to eat cake when they asked for bread! " FYI je __ THE HINDU, September 26, 1998 Tragedy repeats itself (SE Asian crisis) Date: 26-09-1998 :: Pg: 12 :: Col: c By Ravi Arvind Palat NOTHING encapsulates the current world economic situation better than the Uruguayan novelist, Eduardo Galeano's paraphrase of a famous aphorism: For us, he said, history is a tragedy repeating itself as tragedy. And so it has done for 15 months as the world economy lurched from crisis to crisis. Since the Thai baht went into a free-fall on July 2 last year, the fundamental premise of the International Monetary Fund(IMF)-led strategy to contain financial chaos has been to tie loans to thorough-going reforms. In Thailand, Indonesia and South Korea, the IMF provided loans to prevent industrial enterprises and financial institutions from defaulting on their foreign debt on condition that these countries reform their banking sectors, adopt prudent and transparent lending protocols, dissolve insolvent enterprises, eliminate nepotism and corruption, sell state-owned enterprises and nationalise the overseas debt of private enterprises. In each case, it was assumed that these changes would provide a firewall behind which these emerging market economies could recover and, more importantly, prevent the contagion from spreading. No currency flotation, loan guarantee or structural change to the financial sector has arrested the headlong descent of these economies. Though the implementation of the draconian remedies prescribed by the IMF has led to large-scale unemployment and to the collapse of Mr. Suharto's regime in Indonesia, they appear to have intensified the economic malaise. Mr. Goldman Sachs predicts that this year the real GDP will contract by 15 per cent in Indonesia, 8 per cent in Thailand andMalaysia and 7 per cent in South Korea. The Deutsche Bank estimates the unpayable overseas debt of these countries at $30 billion for South Korea, $ 22 billion for Indonesia, and $ 13 billion for Thailand. Non-performing loans from domestic banks are estimated to be almost 40 per cent of the South Korean and Thai GDP, more than 30 per cent for Indonesia and Malaysia. Despite this spectacular record of failure, the IMF continues to prescribe the same bitter tonic to Russia, where the rouble has witnessed a free-fall and its government is a shambles. Unlike the debt crises in Latin America in the early 1980s and the Mexican crisis of 1994, it proved impossible to quarantine the current crisis to the emerging market economies as the malaise spread across the world. Its effects have ricocheted through Japan, the world's second largest economy, where the unemployment rate has risen to a record 4.3 per cent. And, the Dow Jones Industrial Average's meteoric rise was punctuated by its two highest-ever point losses on October 24 last year and on August 31 this year. Venezuela, Brazil and Mexico are said to be poised to tip over the cliff into recession. In another mark of the times, though the All Ordinaries hit a 12-year low, the Australian Treasurer, Mr. Costello, was able to say Australia's 3.4 per cent growth made it the strongest economy on the Pacific Rim. Before the Thai collapse, such a rate of growth would have seemed catastrophic to Asia's miracle economies. If the breathtaking scale of the crisis invites comparison to a contagious disease, the metaphor of an Asian flu sweeping across the planet may be wrong. Firewalls have failed to contain the crisis because it does not inoculate the system itself. First, the worldwide sweep of the crisis indicates that the crisis cannot be treated on a case-by-case, event-by-event basis. When it affects economies as disparate as Russia and Japan, Indonesia and the United States, New Zealand and Venezuela, we need to see it as astructural crisis of the global economy as a whole. As the popularity of terms such as ``Pacific-Asia'' and ``Pacific Rim'' indicates, trade and production structures along the region are tightly integrated. By the early 1990s, intra-Asian trade overshadowed trade across the Pacific as large transnational corporations began producing or purchasing low-technology components in low-wage areas like Thailand, China and Indonesia. Parts embodying
