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Strategies & Market Trends : Win Lose or Draw : Be A Steve, Make A Call
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To: mishedlo who wrote (1336)2/8/2003 7:42:49 PM
From: lurqer  Read Replies (1) of 11447
 
IMO, the biggest difference between this Secular Bear and its two processors is the effects of Globalization. In the '29 - '49 Secular Bear, Smoot-Hawley and WWII precluded many global effects. In the '66 - '82 Secular Bear, we all know what happened to the American steel and auto industries. This time, I expect the effects to be greater.

During the initial stage of a Secular Bear, the forces of deflation are dominant. If, as in the '66 to '82 Secular Bear (but not in the '29 to '49 case), the Fed persistently pumps, then powerful inflationary forces are unleashed. While the inflationary forces quickly dominated in the last Secular Bear, the deflationary forces are augmented by a more powerful globalization effect this time around.

As I've posted elsewhere these two countervailing forces do not so much combine (and cancel) as they exist simultaneously in a poisonous amalgam infecting our economic health. As stated, in the last Secular Bear, the inflationary effects of the Fed's relentless pumping quickly dominated. This time, I would expect the deflationary effects to be more persistent.

Hence, I expect a significant distortion from the current price structure - with some prices skyrocketing while others plummet. All of this will be economically wrenching, and particularly destructive of the economic health of America's middle class.

Again JMO.

lurqer
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