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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: pater tenebrarum who wrote (54199)1/4/2001 3:04:17 PM
From: NOW  Read Replies (2) of 436258
 
"But when the central bank allows a "bubble" to keep growing, we will most likely have an economic crash after a stock market crash. If a crash in share prices in the US, whenever it happens, will be followed by a very steep decline in economic activity, FNM will lose a bundle. It will happen either because of a rise in loan defaults by its customers or because of defaults by the "other party" to its hedging operations. In such a case its losses will be so big that only the Government will be able to salvage its operations. But the Government wont do so before shareholders are wiped out. If on the other hand a steep decline in share prices, especially of companies that do not have any earnings, will not be followed by a steep decline in the economy, FNM should continue to do well in the foreseeable future"
Once again, timing is off, but logic sound...
simplex.co.il
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