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Pastimes : The Naked Truth - Big Kahuna a Myth
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To: pater tenebrarum who wrote (83385)1/14/2000 8:00:00 AM
From: NickSE  Read Replies (2) of 86076
 
Excellent article...a must read!!!

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How the Bubble Bursts - John H. Makin - AEI Economic Outlook
aei.org

Is the high-tech sector in a bubble? You bet it is. At its peak in 1989, Japan?s Nikkei 225 had reached a level 700 percent above the level fourteen years earlier, when the Nikkei began its gradual ascent in 1977. In 1929, the Dow Jones Index was about 275 percent above its level fourteen years earlier. By the same yardstick, the S&P High Tech Index is up over 850 percent. The S&P high-tech sector is clearly in a bubble that is distorting both the allocation of capital and the behavior of the overall economy. Many of the high-tech companies are promising, but their prospects have not doubled or tripled during the past eight weeks, though the prices of their stocks have.

[...]

There are further details about U.S. inflation statistics that are troubling for the Fed and are probably a reflection of the rising bubble in the tech sector atop an already strong stock market. The Bureau of Labor Statistics data used in calculating the CPI claim that the price of housing has risen about 2.2 percent in the past year. That low level measures the cost of renting a house, not the cost of buying a house. The cost of buying a house has risen by 8 percent in the past year, and that rate has recently accelerated. Statistics released in October show that the average new-home price rose at a 24 percent annual rate during the previous three months.
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