Hi NYCB, I check in on this thread every-so-often to check on the mind-set of what in fact has, without fail, turned out to be popular thinking, just to get a sense of the excitement and buzz. I do the same lurking at several other threads, though have not participated at all, except in the cases of ORCL and, less (so far), GE.
You hear the rumble in the dark foliage, you feel the tremor of the earth, and you had correctly sense danger, anticipated the possibilities and acted. You are brash, in-your-face confrontational, but obviously street smart, as a New Yorker should be, else you get turned into little bits and left next to the fire hydrant :0)
I understand your NY minute time constraint, for we are as manic here in Hong Kong, but what you should have explained in your recent rants are as follows:
(a) The US is the primary locomotive to the world economy;
(b) Other economies acts as second and third locomotives, make the spare parts, provide raw materials, and some services;
(c) Financial fuel was created under the watch of Greenspankie, as it was his duty to provide the fuel, channeled through the traditional banking and equity market conduits, and through the super-charged bond market mechanisms;
(d) Inordinate amount of fuel was provided, accompanied by cheerleading about the role of technology, its effect on productivity, sustainable corporate profit, growth, the judgments of the analysts, the resultant rationality concerning why the risk premium can logically be lowered for all of eternity based on the fact that instant communications make all market participants smarter, and most absurdly and recently, about how J6P is now adapt at managing his home equity as a part of the inferno financial train trip to money heaven;
(e) Greenspankie does not know that his job as a central banker is to watch over and macro-control the money supply, supervise to assure the financial market integrity, and is not to comment on subjects that no one, and possibly he least of all, knows for sure about. His Juliard training as an oboe player did not prepare him to conduct in an orchestra and certainly not a technological revolution; and
(f) In any case, the world train was set on fire, rushing into uncharted territory.
You then should have explained that, yes, there has been a technological revolution, and it has resulted in efficiencies that enables us to rant at our distant neighbors, steal from the unwary, flip through the latest issue of some naughty magazines, and remove a whole bunch of intermediaries between businesses and their customers, ultimately acting to permanently deflate some parts of the economy and temporarily inflate other parts of the same economy.
During the initial phases of the technological revolution, all the combatants reached for the necessary weapons, all at once, and there then was not an adequate supply to go around. The weapon suppliers, out of shortage and initial buildup, garnered enormous revenue from the eager combatants. They then used the enormously growing revenue to raise new money via the financial markets, believed in their own marketing spin, and added enormous capacity. The rest of what happened constitutes the financial, economic and political history of the past 10 years.
As in any revolution, blood is spilled, wealth is transferred, entities and organizations fall victim, and chaos, retribution, revisionism, and extreme measures mark the end:
(a) There is no new economy vs. old economy, but only the economy that should enable folks to feed their families and allow them to fend themselves in retirement;
(b) There was no productivity increase, except in three sub-sectors of this one economy, namely computers, chips, and telecom services, and these resulted from piled-high-and-deep (PhD) economist of Greenspankie’s ilk massaging the numbers with hedonism, less politely termed lies;
(c) There was no productivity induced 20% per annum increase in sustainable profit by most businesses that comprised the economy. Recent Commerce Department revision of NIPA profit for 1996-2000 (was supposed increase from 463.3 bil to 577.9 bil, a 24.7% growth, which in itself is already not a big deal) is an actual DECREASE, from 463.3 bil in 1996 to 448 bill in 2000;
(d) So, what was the stock market valuation all about? Was it really because J6P turned into genius trader of paper?
(e) There was only the bubble, induced by fevered imagination, supported by its own cyber stock trading community, fueled by Greenspan money, cheered via CNBC, and the bubble is starting to explode, inducing smaller but no less dangerous bubbles in the process … Dollar, real estate, DOW stocks, and then, finally, completing its intended damage; and
(f) As in all revolutions, on the new day after the closing of the episode, many revolutionaries will dot the landscape, inanimate, in the warm sun, to be picked of their treasures.
The final silencing of this CSCO thread will be one of the least costly legacies of Greenspan era.
Chugs, Jay
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