qdog, you ask "prinitng of money, but we did that in the 60's. End results were what?"
The end result was huge economic development slowed by an OPEC cartel in 1974, restricted oil supply and an 8 year long recession which ended even before oil dropped hugely in 1986 in response to market adaptations to expensive oil. The 1974 drop was not caused by irrational exuberance on the part of stock market investors but silly OPEC people who thought, [and still think], they could corner the market on oil. They would have done better to just keep on pumping.
The 1929 crunch and subsequent depression was about government restricting trade. And simple investment mania with difficult market clearing mechanisms. Markets clear a lot faster these days. So when there is a crunch, the mess is tidied up faster. No doubt politicians can still exacerbate problems.
The 1987 crunch in USA, New Zealand, Japan in 1990 were property-based crunches caused by borrow-and-hope in increasingly deregulated financial markets. Like there was no tomorrow, people borrowed and bought because prices had always gone up. Even though property was sitting empty. The resulting financial panics flow over into other markets and a general crunch results.
Good point, vaporware in investing - yes, yes, the pot of gold is going to be at the end of the rainbow if we only believe. There is plenty of that going on. But where there really are developments such as Qualcomm is producing in the world, there really are pots of gold being produced. I recommend a 1000 point drop to get the Dow back on track to 16000 by Feb 2002.
The trouble is, I won't sell, because I think company profit growth will exceed interest rate returns on money. If lots of people think that, then the markets will just carry on up as money keeps looking for some sucker to hang onto it so the Fed can tax them via dilution.
I guess we'll find out won't we.
Okay everyone, line up. Qualcomm results out soon. Place your bets. Doom and gloom or optimism and hope.
I'm fully invested!
What fun.
Mqurice
16000 Feb 2002 |
