Dale:
I have not been able to keep up with the posts as I was teaching
today. I read, however, news on the wire. The following are the
fascinating developments that will (IMO) temper the market's
downturn.
* There is a lot of infusion of federal money (liquidity) into the
market; this in effect is a reduction in the real rate of interest.
* The BOJ is SMART. I was surprised to learn this. But, Japan
being the second largest economic powerhouse, I should have
expected this: They have recently made a mutual PACT with the
Federal Reserve Bank of NY to let them have US$, obviating a
need to liquidate their US Treasury security holdings.
Both of the above moves effectively reduce the interest rate (or
not increase it) and hence the stock markets are unlikely to
plummet. The stock markets will go down somewhat as
Yamaichi's failure is being perceived as a symptom of a
cancerous Japanese (or Asian) financual system. But, there is
unlikely to be any panic, given (further) that the Japanese Govt
has reiterated its stand to infuse public funds into the banking
system. Even tech-stocks may rebound or not decline too much,
except the ones pumped up with helium, like YHOO, IMHO.
Sankar
GOOD NIGHT!! |
