What do Alan Greenspan, Jerry Jones, and Dan Snyder all have in common? People who worked hard to become rich and powerful, then left the real world behind. The stock market looks to enter another bear slide which should take the Nasdaq down to around the 2100-2300 level, resulting in a 60% decline. Much of next years hard recession will result from individuals who have large capital gains to pay. How many people sold old economy stock in year 2000 to "buy Cisco on the dip" In March? How many people sold Johnson & Johnson, owe taxes from long term gains, turned right around and bought Cisco at 70, and now are looking at the stock near 40 with capital gains to pay in April? Mutual funds are also going to be sending out capital gains forms on losing returns, resulting in further asset deflation early next year. Call it the Bill Clinton income tax going away present, in honor of his successful tax hike in 1992 and now not so brilliant economic plan. It is called a bubble nightmare. And a recession going forward.
If Greenspan would have cut rates today it would have allowed individuals a modest rally to help recover some of the losses and rebalance expectations. People are the economy, so a hard landing for individuals will equal a hard landing for the economy. Face it, Greenspan, Rubin and Clinton let the bubble get so exciting and made so many average people feel rich that our entire economy is leveraged against it. Personal debt is at an all time high: lots of people bought huge homes and have yet to furnish them, bought SUV's that are not economical, told a boss or two to kiss their butt, and so on. Now the NASDAQ is facing the worst U.S. market decline since------1929-1932. Yes folks, only then did an indice decline by greater than 60%.
To quote Alan Greenspan in 1999, "Bubbles are very hard to define in the aggregate and often aren't understood until they have passed." And I bet the public thinks "prosperity is right around the corner." Crap, I hope most are praying anyhow. |
