Truff, "the ducks are still quacking". well said...they are indeed. the reason is that the Fed has quickly back-pedaled from it's half-hearted attempts to mop up the y2k liquidity as it became obvious in the first week of January that the stock market is particularly ill-prepared for such action. of course, that doesn't invalidate the basic premise of the article, namely that most stock prices have disconnected from reality to a heretofore never seen extent. and that's not sustainable, no matter how much new credit is pouring into the system. as good old Ludwig von Mises, a fellow misanthropic Austrian, has observed: "a credit induced boom continues as long as new credit is poured into the system at EVER INCREASING RATES. it ends when the central bank decides to curtail the creation of fresh credit. if the central bank does NOT curtail fresh credit creation, it ultimately ends with the total collapse of the currency system involved." (not verbatim).
there is much talk of Greenspan trying to engineer a soft landing...well, that's not what he's doing. on the contrary, he supplies ample liquidity through the back door via the repos for tri-partite settlement, a.k.a. "coup de whiskey" for the stock market, the name given to said repos by a 1920's Fed governor.
so we should all prepare for a hard landing...it seems inevitable.
now, if i could only figure out when....<ggg>
regards,
hb |
