Dear Jay and coworriers.
Cataclysmic collapse? If you mean 1929, forget it. We have no huge quantities of inventory in the system. Then there were lots of people on 10% margin, wiped out in an instant. We also don't have such an eagerness to close the borders of every country to international trade as they did then. Maybe you mean 1987? The credit squeeze doesn't look so world wide as it was then. It looks to me more like 1998 when crony capitalism revealed itself in all its ugliness as the scourge of countries like Japan,Thailand, Korea,Russia etc. This time around we have, so they say, overinvestment in money losing companies. I'm no prophet. Softbank is in trouble, stock price wise and maybe cash wise, but this does not apply generally. Do you really think Sony or HP or Texas Instruments are ready to collapse? Do you think broad band development will suddenly halt, and reveal the internet connected world as a hoax? The growth of cell phones and photonics and computer applications over the internet will suddenly halt? What I see is the P/E's dropping rapidly, not only because of the decline in P but also because of the almost explosive growth of the E. Meanwhile the high interest rates engineered by the U.S. Govt. are slowing housing starts. Soon automobile sales will slow. The rationale for high interest rates is decreasing all the time. I just don't see the economy collapsing. Sometimes a patient quickly develops a high fever and things look serious, but aspirin acts as a wonder drug and soon she is cool and comfortable.
Cheers,
Malcolm |
