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Strategies & Market Trends : Waiting for the big Kahuna
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To: Gary105 who wrote (43339)9/2/1999 10:28:00 PM
From: yard_man  Read Replies (2) of 94695
 
>>1987 showed we shouldnt confuse stock market with economy<<

In general the proposition is true, but now the financial markets are a large part of the economy ...

Take a look around yourself -- it is different this time. A stock market crash or even just a repeat of last years fall decline can be devastating to the economy and what did you say:

>>what prevented fed from raising rates further last year was fear that it would dampen global recovery. this is no longer an issue. next year Asia will grow, Latin America will recover, Europe will grow, US economy will slow but not collapse. <<

rather what allowed the fed to follow a course of very loose credit without damaging the buck was the Asian situation ... you are right this fortuitous set of circumstances has changed. The fed, if it cares at all about our purchasing power will have to act now by raising rates again -- the consumer-led "boom" in economic activity is a farce -- there was a real boom but it has been extended beyond the normal duration by easy credit

the apparent health of our economy as a whole is more intricately tied in the short term to the performance of financial assets than it ever was in 1987 -- this is 1999, nothing like 1987, nothing at all
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