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Politics : Formerly About Advanced Micro Devices

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To: Scumbria who wrote (115638)	6/12/2000 8:01:00 PM
From: Jim McMannis	Read Replies (3) of 1570758

Scumbria, and other that dare read this... RE:"Panic, depression, exhuberance, more panic....." Very good...the market continues to do the hokey pokey but maybe the lows hold. On a more serious note... I see the price of gas back up over $2/gal and the finger pointing is starting again. I predicted this would happen after Memorial day when everyone cranks up the SUV for the summer. Sure enough...crude hits $31.50/barrel. The government is looking into who's at fault. Can't be the consumer or OPEC...must be the refiners. Must make a popular villian you know. Today the DOJ started going after the credit card companies...VISA and MC...say they have a duopoly. Probably a safe bet on this one since they make nice villians...plenty of publc support there, unlike Microsoft. Everytime I turn on the turn a rep from a Wall Street brokerage is predicting (praying) that AG doesn't have to hike anymore. (buy stocks now)...All I can say to that one is the sucker line is full.... Of course these were the same guys milking the market and the "no inflation scenario"... Whooops, looks like we have plenty of inflation now...but it's no wonder. Inflation is basically caused by too much money chasing too few goods. So where did the money come from? The FED has been printing for years but until recently inflation was tame...Then there is the wealth efect from the stock market. OK, fine, I'll give that some credit...but on the other hand a lot of that money is locked away in retirement accounts so we can't blame it all on the stock market... So where is the wild card? Well, in the eighties there was a famous FED and interest rate watcher named Martin Zweig. You might remember him from his famous saying..."Don't fight the FED"...but I remember something else he said...to the effect that tax cuts are inflationary. This makes since because taxes cuts effectively increase the money supply. So where was the tax cut that got this inflation on a roll? REAL ESTATE...the elimination of the capital gains tax on your primary resisdence, at least up to $500k. Hey that ought to free up some money and drive housing prices up, eh? It has...and helped increase new building...trouble is that a lot of the materials in housing are commodities. Some even oil related like roofing materials and asphalt. Does anyone now wonder why housing prices are getting a boost...and inflation of course since some of that money chases other goods...like SUVs. So now Greenspan has to fight the wealth effect of the market AND a major tax cut....this is why I think there are more hikes coming and Alan is still behind the curve... Jim

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