Shane, yes. Even though stock exchange margin is, in theory, lower than it was in 1929, this is only so for individuals. The LTCG fiasco has shown us that huge margin loans still exist for large players, and institutions are much more important to the market today than they were in 1929. The good news is, most internut cos. are not marginable. But other "blue Chip" crapola tech stocks are, and their collapse is what could bring down the house of cards.
Also, derivatives did not exist in 1929. Now, nearly every large financial institution is dependent upon the fiscal well being of all other large financial institutions. Making a worldwide cartel out of what are supposed to be competitive institutions leaves the financial system vulnerable to the weak link in the chain concept. Thus far, the weak links have been relatively small. But if a big player starts taking water, it is doubtful that Washington will be able to stop a total collapse at least for a short period of time. |
