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Pastimes : The Naked Truth - Big Kahuna a Myth
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To: BGR who wrote (65896)10/1/1999 9:16:00 PM
From: pater tenebrarum  Read Replies (1) of 86076
 
well, since you mention Krugman, he believes the U.S. stock market is a dangerous bubble.
and you keep on mentioning LAST year's crisis. it hasn't much to do with now, imo. now we're faced with some cyclical inflation creeping back and an economy that needs $5,20 in credit for every $1 in GDP. we're looking at an exploding current account deficit that needs to be financed from foreign sources so the U.S. can continue to consume like mad. a negative savings rate. a corporate America that's up to it's eyeballs in debt (currently at a post-depression high)and cares more about buying back it's inflated stocks and WS pleasing accounting tricks than anything else.
last year we had a crisis somewhere else if i recall. what i'm afraid of is that we could see a crisis right at the centre of capitalism this time around.
the 'long term investors' will lose their level head right at the bottom...when it's too late.
as to formal or informal books on bubbles and economic fundamentals, i have my head pretty full with that stuff already...i doubt yet another one will make much difference, but thanks anyway, i'll check the books out you recommend.
the fundamental backdrop to the current economic and financial bubble is exactly the same that has been present in bubbles of note before it: high productivity growth, big technological advances, disinflation, a way too lax monetary policy, incredible asset inflation and last but not least lots of financial engineering (known in Japan as 'zaitechu').
it's going to pop like every bubble before it.

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