From Colin Seymores' page....................
"In the case of the US, we are seeing stock market speculation, some real estate speculation and a terrific boom in mergers and acquisitions not benefiting efficiency but benefiting those bringing it off- plus there's an explosion of subsidiary financial operations, including in particular junk bonds."
"When the market fell on Monday, it was blamed on South Asia; any future problem will be so blamed. But no one should doubt that there are grave flaws in the Wall Street Financial Structure... it was an indication of the depth of the uncertainty. I wouldn't make any predictions as to when there might be a crash. One's wrong predictions are always marvellously remembered; one's right predictions always get forgotten... I, of course, don't use the word crash; I repair to financial language and talk not about a major correction but a major adjustment. (I am considering retitling my book on the 1929 crash The Major Adjustment.)"
"One of the undoubted effects of a correction will be on the macroeconomic condition of the economy, because we have a very large percentage of the population of the US now holding stock market securities in mutual funds [the US equivalent of unit trusts]. When the correction comes, there will be a slump in consumer buying and some slump in public investment- in other words a recession."
"There should have been far more warning about the speculative splurge on Wall Street and the extent of citizen participation. That was the mistake that the Federal Reserve made in the Twenties, and the mistake that it has made again now... when trouble comes on Wall Street, the blame will all be passed to Indonesia, Malaysia and maybe Japan. Wall Street insanity- let me use a slightly milder expression, Wall Street 'speculative error'- now has a perfect cover."
"In the US we now have far more mutual funds than there is intelligence, perhaps integrity, to handle them. They are the bridge between the innocent and the eventual loss."
"When you see reference to a new paradigm, you should always, under all circumstances, take cover. Because ever since the great tulip mania in 1637 [when 'investors' bid up the price of bulbs to astronomical levels, even devising a system of call options on tulips they didn't actually own], speculation has always been covered by a new paradigm. There was never a paradigm so new and so wonderful as the one that covered John Law and the South Sea Bubble- until the day of disaster."
Excerpts from UK newspaper The Observer of 21st June 1998: John Kenneth Galbraith, 89, interviewed by Ben Laurance and William Keegan on Wednesday June 17th.
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