January 13, 1998

Investors and financial analysts in the U.S. are worried the Asian flu will land on our shores - that the contagion effect will roil our markets. We are less concerned than most, and for simple reason. We believe the bulk of the impact of monetary policy mismanagement in Asia will be contained in the region. Our rationale is based on an economic theorem associated with Professor Robert Mundell of Columbia University. The theorem states that the burden of adjustment to an economic shock is inversely related to an economys size. The impact of a negative shock will be quite large for smaller nations and vice versa.

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