CB, I must respond to your post and respectfully disagree.
<<The strong US economy in the 1920's was not, in general, a bubble, although some sectors probably were.>>
Yes, it was in every way a bubble.
<<Similarly, the strong US economy in the 1990's was not, in general, a bubble, although there probably was a bubble in certain sectors. Telecom is probably one. >>
Yes, it was a bubble and it still is. Even more so. When this current bubble pops, it's going to cause more financial pain than ever before. The nasdaq will get back to it's 10-year channel and that's nowhere near where we are now. Try slicing it down to 1982 levels and then we might be talking fair value and recovery.
Telecom was one bubble to pop and other sectors, especially those in tech where pe's are nowhere in site. There has never been any instance in history where excess isn't culled and this will be one of them.
When I see tech's starting to have pe's based on fair value without government (fed) intervention to the 'nth degree and possibly some dividends, then we can discuss a recovery. Otherwise, there will be no recovery anytime soon, regardless of what talking heads on TV say.
My reasons for this are as follows:
derivative manipulation
enron (others will follow)
massive consumer debt
unemployment rising
over-valuation in equities
banks inability to call in loans
excessive refinancing
pension fund shortfalls
excessive education costs
argentina and japan, etc.
the widening gap between the classes
war on terrorism going nowhere...
Petrol |
