and half years. That does not mean that the peg was bad.
We can say, however, if you assumed that the dollar's solitary strength would Continue for some time, you should have adjusted your own currency. In the case of Hong Kong, 93 % of its GNP and CDP comes from service industry. As long as foreigners buy and pay for Hong Kong's service in foreign currency with the exchange rate of one US dollar comparing to 7.8 Hong Kong dollar and as long as Hong Kong people can buy their necessities and import using such foreign currencies, they do not have to adjust their Own currency. As you mentioned, service in Hong Kong is expensive. Staying in the Shangri-la one night costs you 45,000 yen. They will keep this rate if they can expect the US dollar's devaluation in relation to other currencies, but if the dollar alone continues to be high for a long period of time, I feel they may decide to adjust their currency at a certain time.
Is a yen circle possible? What is it merit? I think the yen circle is possible and I want to pursue it. To understand its merit, let's think about America. Americans can borrow money in their own currency. It is unfair, but of course no one lent money to Mexico in Mexican pesos. If I lend money in Mexican pesos, and if Mexican peso crashes, what shall I do? I think it is a great merit to borrow money in your own currency.
｡?YAMANO
I am not an expert of the financial field but I think I can answer two points.
As Dr. Shiraishi said, if the present situation continues, the virtual world will destroy the actual world. How to control it is an essential problem. It is a never-ending question for those of us, who are making and selling hardware. Are we doing alright? When you are working in the field of physics, you are working very hard, calculating and earning money.
Other people just talk on the phone and say yes, which is a lot easier. I believe this is one problem in the present society.
Students tend to avoid science and capable students go to work in a company like Dr. Pakkasem's.
I think we need a master to handle this problem. All of us can suggest who should be a master and where this master must work. A master should explain alternatives. Of course all of you already know this as experts.
For example, each year a white paper is issued to compare research expense of each country, America, Germany etc.
But if we use an IMF rate for comparison, we will be very confused. So we use buying power for evaluation and then we can have a reasonable result. One year American research expense was reduced to about two-thirds. I asked why and some American people explained that there was no reduction of research expense for America, but that the reduction was because they calculated in the dollar. Despite this the report issued by the Science and Technology Agency showed all amounts in yen. When the expense was converted by the IMF rate, it produced such a result. The Agency started to evaluate all by buying power par. As you know, buying power par is determined by calculating how much of a product of similar properties such as gasoline, water etc., you can buy by unit. In case of Japan, according to buying power par used by OECD, one dollar compares to 180 or 170 yen.
The movement of this rate remains relatively stable. I guess this must be a master. If possible, Mr. Soros should come and turn over everything. Then everybody does not have to be so upset. It is my wishful thinking. That's what I wanted to say.
｡?PAKKASEM
First of all, the best medicine to protect ourselves against all this under-regulated financial flow is to make ourselves strong first, strengthening our own capacity first. That's why they've been named "financial virus". They attack you when you are weak. They attack the pound, they attack peso, they attack Southeast Asia when we are weak. Weakness is shown by the sign of current account deficit or over-valued currency or so on and so forth. We must allow ourselves more flexible exchange regimes. Dollars dominate the world. We would like to see much more basket of international currencies, such as the Euro dollar and future yen. If people accuse Japanese of yen zone or yen block, why don't they tell them?
Euro is the Mark's block, whether you like it or not. The Mark dictates everything in Euro currency, 160 Germans asked the Asian Development Bank president, "Why don't you stop the corruption in Asia?" I was lucky. I had one English man next to me. He happens to be an adviser to Margaret Thatcher, James Power. He said, "Let me answer this one. How do the Germans record their account in Italy? Because the GNP in Italy is 60%, a so-called parallel economy, black market, so what can I do? It happens everywhere." So let's make ourselves strong and keep our exchange regime flexible. Don't allow the constant current account deficit.
Secondly, on the surveillance system, I don't want to use the word, "control". That's much too strong. The regulatory
