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Strategies & Market Trends : Currencies and the Global Capital Markets
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To: Sam who wrote (3465)7/9/2002 9:18:59 AM
From: Robert Douglas   of 3536
 
Hi Sam,

There's an old saying that all news is bad news in a bear market. A bear makes routine and commonplace events take on ominous tones. I mean, really, do you think that WorldCom signals a "debt meltdown?" Scandals aside, it seems more like a company with massive debt that couldn't ride through a downturn in business. Not exactly a new event in the history of capitalism.

Look at this statement from the article:

"If we don't see a renewal in risk appetite in the corporate lending market in the next six to 12 months, then
we are on a very greased banana peel toward a Japan-type syndrome,"

First, the article complains about bad loans and without losing a breath, they complain that the banks aren't making enough loans!

Damned if you do, damned if you don't. A perfect bear market attitude.

I've seen this stuff before. A garden variety recession (which this one is) pushes people into a frenzy as they imagine the worst; like Japan-style stagnation or 1930's type depression. The comparisons are so tenuous that it isn't even worth commenting on them. But in a bear, people lose perspective and a sore throat sends people into the streets screaming "Plague!!"

So, when I read articles like these, I cut out the hysteria and try and look at the facts. Do I see any signs that the economy is melting down due to a collapse in lending, or is this just a run-of-the-mill recession with the expected handful of bankruptcies? My opinion heavily favors the second.
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