Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: westpacific who wrote (3029)	4/14/2001 9:16:08 PM
From: westpacific	Read Replies (1) of 74559

We will see the end of the "cult of the Fed" "The fact is that the Fed created the biggest economic and stock market ballon in US history, and they did it over a period of years. This allowed, in particular, the technology sector of the economy to expand production capacity far beyond what was needed. Lowering interest rates flooding the banks with liquidity won't solve the problem. Only time will solve the problem. Excess capacity will have to be worked off. The Fed can't work it off. Time, bankruptcies, removal of excess capacity are what will work it off. That entails time - and pain. And everybody is up to his eyeballs with debt. Corporations are choking on it. To work off debt also takes time and pain. In a bear market, margin debt is a speculators worst enemy and a traders worst nightmare. The peak for margin debt on the New York Stock Exchange was $278.5B in March 2000. By Febuary 2001, it was down to $186B. It would'nt suprize me to see this figure drop to around $30B before this bear market is over. We're also seeing the beginning of the end of the cult of "buy the dip". Come hell or high water, in a major bear market, stocks head for levels that I call, "great values". And the dreaded secret is: We're not there yet. Ricard Russell Barrons West

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