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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: sandeep who wrote (54661)1/5/2001 2:19:44 PM
From: pater tenebrarum  Read Replies (9) of 436258
 
it's not reality that needs to catch up with stock prices, it's the other way around.

we have debated the productivity issue to death here already. of course it has risen. but it is typical for disinflation asset bubbles that they occur when productivity rises. productivity rose e.g. MUCH FASTER during the 1920's than today. this is what seduces the CB to keep rates too low for too long, resulting in unsustainable credit and asset bubbles.

you be my guest and don't worry about it...to come back to one of your arguments, in 1929 they also had "more weapons to combat most problems which they didn't have 20 years earlier". you can say that at any time in history, because we have constant progress. but it happens in waves...two steps forward, one back. the Roman empire was the pinnacle of civilization at one point, and its final bear market went to zero actually.
500 years after its demise, humanity had been thrown back into the 'dark ages', actually LOSING knowledge that had been gained earlier, and having to re-discover it. that wasn't ONE but five steps back.

i cite this extreme example mainly for the reason to illustrate that there is no reason to be smug and confident about a civilization's ability and technological capabilities when it comes to combating one of the periodic down waves in human progress. i am not trying to say we'll see a downturn of similar proportions. only that you have to moderate your expectations...things are in constant flux, and the social mood has changed irrevocably from bull to bear imo. and that means the bear will have its way, and bring stocks back to levels where they once again represent value.
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