European Stars And Stripes (Newspaper) - January 18, 1988, Darmstadt, Hesse Page 10 the stars and stripes monday january in 1bbb columns William Buckley Brady report both confused and confusing Vau Street term the Public reaction to the Brady report who killed John Bull on oct. 197" was it did t greatly help when the professional analysis came in. H was t so much that they were con fused it was thai they were concerning much of the report Irrer soluble. And concerning other parts of the report they were both confused and confusing. The tint proposition of Nicholas Brady was that we need to remind ourselves that we simply cannot Paro Chi alive the Market i is now a world Market. By the time the new York Market opens the Tokyo Market has closed. And if you throw in Market in Hong Kong London and san Francisco you can say that just As once upon a Lime inc Sun never set on the British Empire so now it never sew on the Market. If you Wunt to buy ism non Stop there Are ways of doing it then the Brady commission turned in attention to the question what is in that we wish to effect Well what we wish a execute is the Wilt of the consumer. If you want to sell your ism you should be Able to do so. It is the essence of relative Market stability that for every one who wishes to sell there is someone out there who wishes to buy to be sure at a Price to which he k blinded by your willingness to move Down a Natch in yours Keg Price. Now the search in the great autopsy on oct. 19. Was for the extraneous by mischievous Factor. If you began the Day deciding you wanted to sell 100 shares of Standard brands at 99, the transaction should proceed on orderly Linn. But suddenly you found that orders to sell Standard brands were so voluminous you needed to stand in line. And then instead of get Ting 99 for Standard at the end of the Day you got Only so. Sure you could have pulled your order called your broker ill go to hell before i sell Standard brands at less than 99"but King psychology has tet in and you fear that if you fail to run with the hounds you will die with the of. So you let your broker move Down. Down Down with Standard brands and at the end of inc Day you have lost 20 percent of your capital because even As so was going Down so was everything else in your portfolio going Down. Now the Brady commission and everybody else is seeking to decipher what it is thai creates that Kin psychology hysteria. One nostrum that suggests itself nostrum is exactly the right word for in is to handout an order in the new York Slock Exchange specify ing that whenever a Stock reduces in value by 5 per cent trading in that Stock must suspend for 24 hours. So that when Standard brands reaches 95 freeze. The Assumption is that coolness of head would Sci in Dur ing the next Day arresting the irrational slide. Flora Lewis but precisely inc recognition of the first proposition makes this impossible. Because if you want to sell Standard brands and the hell with the governors of inc nose. You simply Tell your broker to get his be Hind on the wire and sell it in san Francisco. And if san Francisco has the same regulations then Sotl it in Tokyo. The net effect of any such regulation would be to drive business away from the United states to an unregulated Market. Well then you ask what is it that makes Standard brands Worth 100 monday morning and Only 80 Mon Day afternoon monday morning the Standard and poor s 500 were Selling at about 21 times earnings. At the end of the Day they were Selling at about 16 times earnings. Well you Tell yourself maybe 16 times earnings is Given the a Cicil Trade Imp ajanic Prole Dionisi la real maybe a demo Crit in november More reasonable than 21 times. To which the response is reason plays an attenuated role at this stage of the game. Stocks in Japan sell for 60 limn earnings. Why Don t like japanese sell their stocks and buy . Stocks and end the Day by quadrupling the yield on their Money you have run into intangibles. In the Best of worlds the Exchange of Security would proceed in orderly procession. Nowadays the technological revolution inc computer activates pre designed decisions at a moment when if there were Lime to rethink those decisions you might wish to reverse them. Can the Brady commission stick a few grains of Sand into the computer slow in Down Burthen you run into the same problem Hong Kong will come up with faster computers and your compute will be instructed to lash Over 10 Hong Kong if Here i any local slowdown. There is no there s never really any put up a step Light and occasionally people just disregard in. Futures of East West linked in Subtle ways London Mikhail Gorbachev has openly admitted thai his Sailem failed to deliver on its promises and no longer appeals As a Model. Scarcely news in the West but in is a signal of great importance in the East. The search for self re Newal requires an attempt to divert human As Well As material resources a a from the Only Field in which the russians proved adept Ai Competition the military. This is one of inc big changes devel Oping in the world As we near the end of the 1980s. The other is the loss of momentum and Confidence in the economic future by the capitalist world s trading system. Each is coming under Active scrutiny but there is not yet enough awareness of How they interact. The Central actors arc inevitably the soviet Union and the United Stales. They Are approaching each other warily in an Effort 10 reduce the danger of nuclear War and diminish the devastating arms race which has undermined the health of both. The political military and economic issues Are intricately linked though specialists who have to focus on details Cre ate the illusion that these Are different worlds. But they must be seen As a whole because otherwise what May appear As a solution to one piece of the problem can aggravate the risks. It is obvious to everybody except per haps to president Reagan who brushed Side the Stock Market crash As Unwar ranted panic that economic imbalance is threatening the West. It creates social problems and also affects military Security. For example a number of euro Pean opinion and policy makers Are now convinced that the United states will draw Back from its commitment to the defense of Europe if Only for budget Rea sons no Mailer what Washington pledges. The Weinberger legacy at the Penta gon can urn out u have weakened rather than to have built up american defense if costly new weapons systems can t be manned and maintained. But if if Gorbachev can do what he claims he wants to do the crucial Competition May shift away from the military. On the face of it this is entirely to the advantage of the West which not Only was t buried under the spectacular communist material Success Tahini kit Khrushchev had predicted but rather dramatically increased the Gap. The 1930s still have a lesson to Leach. There was Little fear of soviet military Power then but great and justified con Cern about the ideological attraction of the communist and fascist visions of order and welfare in the face of capitalist crisis. Communist officials now concede thai they underestimated Cupi liili5m a resilience they argue however that they Are dealing with a different kind of capitalism because of changes provoked by the bolshevik revolution and the Rise of socialism there is something to this. Democratic Stales obliged to respond to the will of their electorates did temper capitalism to provide for social needs labor rights and a modicum of welfare. Not the tree Market alone but that capacity for re form and adjustment propelled inc West so stunningly far ahead of communism s results it would be absurd to Low sight of this now. The West s dramatic Success has been not Only in the production of goods and services but also in the concern Itcan show for in people. There were excesses and flaws in developing the restraints society imposed on capitalism. The Rise of the right corresponded to a Felt need to Correct them. But the new economic problem which must not be allowed to reach crisis make inc Choice of How far logo More critical. Because of shortsighted neglect and also the vast expenditures on the Viet Nam War Wilh nut economic adjustment the . Has run Down its Public infrastructure even Asil has run up its debts. Social needs include roads and Bridges and such of Well As education and Opportunity for the burgeoning underclass the of inc marxist Jar gon. Even the communists especially the chinese have come to see Man s class struggle As a false and debilitating approach to the endless process of society s development. Slipping Back into the circumstances thai provoked the idea that in was the key to the. Future would be mindless and self defeating. The United slain must not forget that the source of its strength lies in its Capac Ity to include people from various Levels of its society not in accepting drawn Lints. A new or rather revived Competition Between communists and the went on social and economic terms would be Good for everybody. And the West can be confident As Long As it preserves the will and ability to attend to the needs of it own people. Or vat Tow n
