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Technology Stocks : Cisco Systems, Inc. (CSCO)

CSCO 78.03

+0.8%

Nov 14 3:59 PM EST

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To: Tulvio Durand who wrote (48459)	2/8/2001 12:26:18 AM
From: SouthFloridaGuy	Read Replies (3) of 77399

PEOPLE, Japan has interest rates of 0%. Does anybody remember Japan of 1990 (Americans lazy, Japanese management is superior, Japan is more productutive, etc.). You guys all sound exactly like the Japanese did in 1990! Taking interest rates to 0 will not make bad debt into good debt, why is this concept so hard to understand? The malinvestment that has occurred to Greenspan's liquidity free-for-all has created an environment where investors will bear the brunt of the unwinding of all the bad debt. I mean technically, institutions should be lending now, shouldn't they??? Why have they restricted their lending practices when interest rates have been dropped by 100 basis points? The REASON is that they have SO much bad debt on their books and there are so many forthcoming bankruptices that they will not lend until all of this is unwound. It's called a liquidity trap and it happened in 1929 in the midst of falling rates by the Fed and in 1990 Japan due to real estate malinvestment and is now happening in America again in 2001. The thing is, AT LEAST JAPAN HAD SAVINGS, AMERICA DOESN'T EVEN HAVE THAT! History has shown that this unwinding is directly related to the malinvestment. If that's the case, and using Japan as the model, we're not out of this for 15 years.

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