THE 1997-98 ASIAN FINANCIAL CRISIS

The Asian financial crisis involves four basic problems or issues: (1) a shortage of foreign exchange that has caused the value of currencies and equities in Thailand, Indonesia, South Korea and other Asian countries to fall dramatically, (2) inadequately developed financial sectors and mechanisms for allocating capital in the troubled Asian economies, (3) effects of the crisis on both the United States and the world, and (4) the role, operations, and replenishment of funds of the International Monetary Fund.

The Asian financial crisis was initiated by two rounds of currency depreciation that have been occurring since early summer 1997. The first round was a precipitous drop in the value of the Thai baht, Malaysian ringgit, Philippine peso, and Indonesian rupiah. As these currencies stabilized, the second round began with downward pressures hitting the Taiwan dollar, South Korean won, Brazilian real, Singaporean dollar, and Hong Kong dollar. Governments have countered the weakness in their currencies by selling foreign exchange reserves and raising interest rates, which, in turn, have slowed economic growth and have made interest-bearing securities more attractive than equities. The currency crises also has revealed severe problems in the banking and financial sectors of the troubled Asian economies.

The International Monetary Fund has arranged support packages for Thailand, Indonesia, and South Korea. The packages include an initial infusion of funds with conditions that must be met for additional loans to be made available.

This financial crisis is of interest to the U.S. government for several reasons. First, attempts to resolve the problems are led by the IMF with cooperation from the World Bank and Asian Development Bank and pledges of standby credit from the Exchange Stabilization Fund of the United States. Second, financial markets are interlinked. What happens in Asian financial markets also affects U.S. markets. Third, Americans are major investors in the region, both in the form of subsidiaries of U.S. companies and investments in financial instruments. Fourth, the currency turmoil affects U.S. imports and exports as well as capital flows and the value of the U.S. dollar; the U.S. deficit on trade is now rising as these countries import less and export more. Fifth, the crisis is causing economic turmoil that is exposing weaknesses in many financial institutions in Asia; some have gone bankrupt. The economic problems of the troubled Asian economies are adversely affecting the United States, Japan, and others.

The U. S. Congress is likely to consider the Asian financial crisis within three broad legislative contexts. The first is in the financing and scope of the activities of the IMF. This includes legislation to provide the IMF with an increase in its quotas or capital subscriptions, New Arrangements to Borrow, an allocation of Special Drawing Rights, and an amendment to the IMF's Articles of Agreement. The second legislative context is in the impact of the crisis on the U.S. economy and American financial institutions. Forecasters foresee a decline in U. S. growth and an increase in the U.S. trade deficit because of the crisis. The third context is in efforts to liberalize trade and investment in the world.

reference:-http://www.fas.org/

GOLD CONFISCATION

With the latest hype in gold, it is important for investors to know all the facts. The weakening dollar has led to the rise in gold prices and currently gold is the monetary unit which other currencies are being valued. Some financial analysts and advisers are recommending reallocating funds from investments such as stocks, bonds, CDs and mutual funds into tangible assets that do not rely on the stock market. But before you reallocate your money into gold, consider the following points.

Gold is being pushed by fear and a bad economy, inflation and TV marketing. Ten years ago the ratio between silver, gold and platinum was 17 oz. of silver to 1 oz. of gold and 3oz. of gold to 1 oz. of platinum. That ratio had stayed pretty static for over 50 years. Today, the ratio is 59 oz. of silver to 1 oz. of gold and 1.2 oz. of gold to 1 oz. of platinum. Fear, government spending and heavy marketing by TV gold resellers has pushed the perceived value of gold very high compared to silver or platinum. The rule is to buy low and sell high.

Gold is at an all-time high. Will it go higher?Probably, but at some point it will turn and when it does, its value will likely drop very fast. If you have gold or you are thinking of buying gold, you need to follow the economy very closely. Watch for a noticeable improvement in the business sector GDP, new jobs, end of government bailouts and end of spending. This is when gold may start dropping. Gold has served in this role for thousands of years, but laws created by governments that have grown too big to put this role in doubt today. Gold Confiscation is still on the books.

We have released two new reports to help educate you about gold and the economy. These two reports cover laws that affect gold ownership, and what options you have in this economy to protect your wealth. Learn about the best way to own gold, how you can protect your wealth with tangible assets, and signs you're paying too much for your investment

India Inc growth story gets better - The Economic Times

India Inc growth story gets better - The Economic Times

Facebook | Ashish Sharma's Photos - TRIP 2 ALIBAGH

Facebook | Ashish Sharma's Photos - TRIP 2 ALIBAGH

NEW FACE OF INDIA

In the past decades, India has been world number one in starvation deaths, foreign aid and bribery. In the 2000s, it was transformed from achronic under-performer to a potential superpower. Here are eight predictions of what it will look like in 2020:

India will overtake China as the fastest-growing economy in the world. China will start ageing and suffering from a declining workforce, and will be forced to revalue its currency. So its growth will decelerate, just as Japan decelerated in the 1990s after looking unstoppable in the 1980s. Having become the world’s second-biggest economy, China’s export-oriented model will erode sharply — the world will no longer be able to absorb its exports at the earlier pace. Meanwhile, India will gain demographically with a growing workforce that is more literate than ever before. The poorer Indian states will start catching up with the richer ones. This will take India’s GDP growth to 10% by 2020, while China’s growth will dip to 7-8%.

India will become the largest English-speaking nation in the world, overtaking the US. So, the global publishing industry will shift in a big way to India. Rupert Murdoch’s heirs will sell his collapsing media empire to Indian buyers. The New York Times will become a subsidiary of an Indian publishing giant.

In the 2000s, India finally gained entry into the nuclear club, and sanctions against it were lifted. By 2020, Indian companies will be major exporters of nuclear equipment, a vital link in the global supply chain. So, India will be in a position to impose nuclear sanctions on others.

India, along with the US and Canada, will develop new technology to extract natural gas from gas hydrates — a solidified form of gas lying on ocean floors. India has the largest gas hydrate deposits in the world, and so will become the biggest global producer. This will enable India to substitute gas for coal in power generation, hugely reducing carbon emissions and making Jairam Ramesh look saintly.

India will also discover enormous deposits of shale gas in its vast shale formations running through the Gangetic plain, Assam, Rajasthan and Gujarat. New technology has made the extraction of shale gas economic, so India will become a major gas producer and exporter. Meanwhile, Iran’s mullahs will be overthrown, and a new democratic regime will usher in rapid economic growth that creates a shortage of gas in Iran by 2020. So, the Iran-India pipeline will be recast, but in reverse form: India will now export gas to Iran.

More and more regions of India will demand separate statehood. By 2020, India will have 50 states instead of the current 28. The new states will not exactly be small. With 50 states and a population of almost 1.5 billion, India will average 30 million people per state, far higher than the current US average of 6 million per state.

China, alarmed at India’s rise, will raise tensions along the Himalayan border. China will threaten to divert the waters of the Brahmaputra from Tibet to water-scarce northern China. India will threaten to bomb any such project. The issue will go to the Security Council.

Islamic fundamentalists will take over in Afghanistan and Pakistan. The US will withdraw from the region, leaving India to bear the brunt of consequences. Terrorism will rise in India, but the economy will still keep growing. How so? Well, 3000 people die every year falling off Mumbai’s suburban trains, and that does not stop Mumbai’s growth. Terrorism will bruise India, but not halt its growth.

reference:-economic times...........

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