The LA time article writes:
>> Today, if you pay no attention to the political feeding frenzy going on inside the Washington Beltway, you can be quite optimistic about the country's future.
The author makes the same mistake that most people make and assume that financial markets and the economy move in lock step. Although they are clearly related and linked, they diverge about 2-3 time each century. 1929 was one such occasion and I believe that 1998 might be another such time (BWDIK). Below is an interesting quote to ponder - I forget where I got it but I checked the stats on one of the fed sites and found it to be entirely accurate. I am not one of those people that believes in a repeat in 29. History never repeats it self exactly, but I believe that economies and financial markets can and do diverge on occasion and that such times are dangerous to one's economic well being and to the political and military stability of the world. I am especially worried about Indonesia. It looks like things are spinning out of control. The Australian Financial times article last week describing Australian military evacuation planning complete with naval and air task forces was particularly frightening. Indonesia is the worlds fourth or fifth most populous country and the worlds largest Muslim country. A resurgence of Anti-Americanism could easily be ignited out of this whole mess. Inspired terrorists are dangerous creatures who do not respect international borders and are not dissuaded by our large scale military power. IMHO.
For twelve months the growth in nominal
gross domestic product has been 6.2
percent and, thanks to a Consumer
Price Index that averaged exactly 0.0
percent, the real gross domestic
product also grew 6.2 percent.
Industrial output soared, up a whopping
11.5 percent during the last four
quarters, yet did not set off inflation.
With unemployment down to 3.8
percent, the prime rate steady at a
relatively modest 5.8 percent (and is
not likely to rise as long as inflation
stays so low). The budget deficit is
vanishing on its own and there may
even be a surplus. You may think
you've heard all those tantalizing
numbers again and again in the last few
weeks, but they're not what you think.
Those statistics are from September,
1929, when the stock market was on
the verge of a devastating crash. The
subsequent bear market took 25 years
to recover. |
