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Last week Robin, retired from the McNeal / Lehr News hour, had a program
that included a segment on Malaysia. He discussed the economic
conditions and how the problem began. He also discussed the plans for a
Cyber city in Malaysia that companies like Intel & several others are
backing. This time the investments in Malaysia will be from the private
sector instead of the government work programs. So there is the chance
that some of these countries can bounce back when companies step into
invest.
However, I do think it is a little more complicated than that. I pulled
out the econ books and have started to look at international monetary
policy. I haven't made it through the chapter yet but did a little
skimming. From what I understand you can check the well being of a
country by looking at the current account and balance of payment. Since
there are complex relationships that makeup the current acount/Balance
of payments that there is a certain amount of risk depending on the
economic soundness of a country. For example there are relationships
between countries currencies-exchange rate, inflation rates, foreign
investments, imports, exports, to name a few. They all have to be in
some reasonable balance. If not we have problems like the exogenous
shock to the Asian economies from the currency speculation.
Although i haven't shed much light in terms of balance of payments and
the current account since I have just pulled out the books. So the point
I am trying to share is that investment in these countries by companies
is not as easy as we think. Just because they have depreciated
currencies.
Harley
John Chamberlin wrote:
> I have a thought pertaining to the Asia crisis.
>
> The media has been focusing on this problem as it
> relates to corporate earnings, reduced sales in asia
> etc.
>
> I lived in Japan for 11 years and have traveled to
> most asian countries many times. We don't sell
> anything in asia! All of the products are asian.
>
> Heres my thought. Although we don't sell anything in
> asia we do mfg most things in asia.
>
> Can it not be said, therefore, that corp earnings
> will be significantly higher for corp that mfg in
> asia due to the weakening foriegn currency and
> strengthening dollar.
>
> i.e. Nike mfg cost for shoes has been reduced by
> nearly 50% due to the weak asian currencies. The
> same can be said about all of the electronic mfgs.
>
> I understand in exporting terms our products will
> cost more in asia and therefore be less desireable
> but as I hae already stated we (americans) don't sell
> anything in asia.
>
> Conclusion: Falling/failing currencies in asia may
> be bad for asians and bad for future exports but more
> importantly, great for US companies who mfg in asia.
>
> John
>
> ===
> john@xxxxxxxxxxxxxx
>
> One friend in a lifetime is much; two are many; three
> are hardly possible.
> --Henry Adams
>
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