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Politics : Idea Of The Day

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To: GROUND ZERO™ who wrote (31540)	5/24/2000 12:33:00 PM
From: Logain Ablar	Read Replies (1) of 50167

Hi GZ. You are quite correct. He carries the biggest stick and I have been too optimistic all year. If it is a true bear then we will have a recession. The loss of wealth will be more far reaching than many think. Right now we have government under funded pension plans (social security, federal and state employees). If we have a 40% haircut these will be impaired more (increasing the tax burden). (I?m not saying the funds would lose 40% since they are quite diversified) All the employer plans have had a benefit of the recent stock gains limiting contributions. This will create future earnings hits. This doesn?t even cover the middle class savings that have been pouring into the market (and these have mostly been in equities). My opinion is I don?t think the FED wants to cause a recession unless inflation rises higher. It is going higher now but once the economy slows (the 0.5 definitely caught the residential and commercial real estate sectors attention, although a developer will build as long a someone is willing to loan the funds) it should ease. I can be wrong since the FED has overshot in the past and can overshoot now. I?ll be the first to admit I don?t know what the catalyst will be to put in a bottom. With no buyers (demand) stocks will still go lower. At least the banks have been holding up so my thinking is we only see one more rise of .25. (I think it would be wishful on my part to not have one more but then I have the crash fear factor) I would think quite a bit of the speculation has come out of the market (although since I am still in and the funds have not had a run on redemption?s this can be me just being na‹ve). I?ve misjudged this market all year and have not learned enough yet. Do you feel this is now a true bear in the markets and not a correction, to squeeze out the excess speculation? I?ll be the first to admit I can be quite wrong on this. Tim

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