Tulipomania Blowoff Contest: Why and When will it end? Message Board

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Non-Tech : Tulipomania Blowoff Contest: Why and When will it end?

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Jun 26 5:00 PM EST

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To: Mad2 who wrote (2693)	3/13/2000 9:57:00 PM
From: Hawkmoon	Read Replies (2) of 3543

Mad2, I hear what you're saying about the triple hit. But in fact, most of those costs they would pass on to their customers were they able to. But they can't because this disinflation is being caused by rapid advances in productivity and efficiency, as well as foreign competition for commoditized items. Only those companies who are able to execute without inefficiencies and excess costs will prosper. Many old economy companies are enduring this painful process now. I also agree that I think AG is using a blunt hammer on the economy. Personally, I think he should just hike margin requirements so that hyper-inflated stocks are not given the same respect as collateral that real property is. (after all, all of our shares are only worth .01 par value.. :0) Instead he thinks that he can raise interest rates to the level that people will opt for safe debt related instruments over equities. Let's face facts. We have a ton of money flowing into retirement funds on a monthly or quarterly basis, plus all of that other cash we all set aside from our salaries to play with... :0) Then we have foreigners over here buying up US assets because of the relative "safety" that US denominated assets present as well as the security of a strong dollar. What that suggests is that the rest of the world economy is structurally sick and that with the free flow of capital seeking out the best return, the US currently is the place to be, even if the valuations are astronomical. AG is having to apply the brakes on US growth, while at the same time the second largest economy in Japan can't seem to get its act together despite unheard of govt deficit spending. That's why I believe the US markets are soaring. They will fall when the US economy fails (or is beaten into submission by an overly aggressive Fed). But it will mean that the US dollar is still the best paying debt asset on the planet, paying 6-7% real interest. Regards, Ron

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