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Strategies & Market Trends : Classic TA Workplace

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To: Lee Lichterman III who wrote (77971)	7/27/2003 5:49:46 PM
From: yard_man	Read Replies (2) of 209892

>>However if they allowed the bubble to fully deflate, it would cause disastrous implications to the economy and could institute a shock to the economy that could take decades to recover from. << disagree -- liquidation is a good thing -- frees capital for productive use. Trying to perpetuate a bubble forestalls reallocation and actually worsens misallocation of resources. Your analysis focuses on money as the measure of value, but ignores the underlying coupling of real economic capital to the ends they are employed for -- hate to say this -- but look at the recent post which Godot link from Lance Lewis -- he relates an anecdote that is quite telling regarding a semiconductor equip co, I think. Message 19144750 They continue to produce without orders in hope that this re-inflation thing works -- just act like the turnaround is coming and maybe it will arrive??!! Heck no. Not only will it not arrive -- the bust will be considerably worse. The Fed does not have its heart or head in the right place -- the policies are simply WRONG, WRONG, WRONG. There was a bubble and the errors in capital allocation (read real capital not funny money) must be allowed to correct. Capital must be put to uses that are sustainable and in alignment with the preferences of consumers -- that doesn't happen by lowering rates and pretending that debts aren't bad and cannot be serviced from profits -- when, in fact, they can't be.

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